SMEs
How To Raise Capital For SMEs
One major problem confronting small and medium enterprises in Nigeria today is the start-up capital. Many people believe that starting a business in Nigeria requires huge capital and have therefore, resorted to looking for white collar jobs that are, unfortunately, in short supply in the country.
This trend has continued to increase the high rate of unemployment in the country as many Nigerians who could have been meaningfully engaged in the informal sector are roaming about the streets in search of job.
The Tide went to town to seek the opinions of some successful SME operators on the best possible way to start a small and medium scale business without running into problems. Below are some of the views expressed.
Managing Director of ACS Success Link Limited, Mrs Scholar Amuzie, who has been in business for over 20 years, said “start-up capital only posses a problem when a potential entrepreneur wants to start with a huge amount of money.
“The problem we have in Nigeria is that graduates fold their hands, moving from one company to the other looking for who will employ them, when they can turn themselves to employers of labour”.
Mrs. Amuzie who runs a supermarket said, “I started this business with N15,000. I will buy recharge cards and move round to sell to my customers, which other recharge card sellers do not do.
“Sometimes my customers would order cards and give me money to go and buy due to the way I package and do my business.
“If you want to start a business, you must first check the location/population and be sure that such business would move in that environment. Then, use small money to test-run it even if you have the whole world”.
She said that for one’s business to grow, the entrepreneur must live within the minute aspect of the profit and be serious with the business.
“For the business to grow, the entrepreneur must be disciplined and develop the habit of taking stock.
“When a business owner becomes lazy, the employee would run him/her down. Another aspect is aggressive marketing and opening of other branches.
“It is the best to start business with savings and take loan for expansion when the business is stabilised, she said.
To the Managing Director, Gid-Andreas Health Plus Services, Dr. Gideon Uwandu, raising a business capital to start a business depends on the type of business one intends to venture into.
“There are businesses that require building a relationship that would enable the company supply the goods for the entrepreneur to sell, make gains and pay before carrying another one. This helps the entrepreneur build his capital with time.
“In such a business, the SME operator needs to be very careful and faithful not to abuse the privilege or open door for law suits which will definitely crash the business”, he said.
Dr. Uwandu advised that, “the best is to start small, develop passion for what you are doing before growing and expanding the business.
“It is very dangerous to start a business with money gotten from money lenders with high interest rate. The issue of meeting up with the payment of the interest becomes the first blow to the new business.
“Another mistake that affects entrepreneurs is jumping from one business to the other just because you saw your neighbour making gains from the business”.
Dr Uwandu who has been in business for over 15 years, said that without creative minds and the preparedness to keep developing in the chosen field, “expansion would become a mirage.
“It is also important to save up to 80% of your gain and re-invest it in the business for rapid growth and development.”
In her own view, a garri wholesaler at Oyigbo, Mrs Victoria V. Jackson, said she started her first business with N5,000.
“The first business I did was selling of groundnut with N5,000. I continued to grow my capital till l made up to N10,000 and switched over to cloths and made up to N25,000 before l started the business of my passion which is garri selling.
“One needs to be up and doing to raise business capitals for the business you have passion for. Many people borrow money and start big but crash due to lack of experience”, she said.
According to her, sitting idle waiting for employment amounts to wasting productive years, adding that one can start business and still gain employment when the opportunity comes.
“Only lazy people sit down at home to wait for government employment or company employment, when they would have utilised the opportunity to be self employed.
She noted that one requires discipline, determination and consistency to grow in business.
She, however, advised against going into business one does not have passion for, saying skill acquisition can also help in growing business.
The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has reviewed the selection process for beneficiaries of a N5billion credit facility allotted, meant for small businesses in the country.
With the new procedure, the agency has mandated the submission of Corporate Affairs Commission (CAC) certificate and Tax Identification Number as a compulsory requirement to obtain the loan.
The Head of Corporate Affairs, Moshood Lawal, SMEDAN, made the disclosure during an interview with our correspondent recently in Abuja.
According to the report,last year SMEDAN signed an agreement with Sterling Bank to disburse loan options ranging from N250,000 to N2,500,000 at a single-digit interest rate of nine per cent, to facilitate the growth of small businesses through enhanced financial access.
The credit, with the target to assist over 10,000 Small and Medium Enterprises (SMEs), has a duration period of 12 months, to enable small businesses to leverage the facility fully.
Speaking at the signing ceremony, the SMEDAN’s DG, Charles Odii, described it as “an important milestone in our efforts to stimulate economic growth and drive prosperity by enhancing SME access to finance.
“We believe that the financial support, which comes at a very competitive rate, will help SMEs expand operations, hire additional employees, and contribute to an overall upswing in beneficial trade and economic activities”, he said.
But giving an update on the issue four months after, the spokesperson said a software application had been developed to smoothen the process and limit human interference on the credibility of the process.
He added that submission of CAC certificate and tax identification number was needed to identify fake applicants and ensure the fund is given to the right persons.
He said, “Concerning the N5bn loan for small businesses, We have developed an app and it is ready now. We are now taking submissions via the software application. Everyone is expected to download it, put in their business plan and every other detail. Then, they would be evaluated on the app.
“We had to move to an app to avoid human interference because almost everyone had a brother or a sister who tried to influence the process. So, it is better to register via the application, upload the Corporate Affairs Commission certificate, Tax Identification Number and other necessary documents.
“Once that process is fulfilled, the request will be evaluated and those qualified will get a reply immediately but if we had continued with former procedure, the process may be influenced.
“We also noticed that most applicants do not have their CAC certificate and that is a very important document to be submitted.
“Some persons have claimed not to have these certificate but we have insisted that it would be a very important criteria to receive the loan or they would be ineligible. We have promised to be transparent about this initiative and that promise will be kept”.
On the status of applicants who had registered earlier, Moshood explained that those applicants must start the process again using the newly developed app in order to be considered for disbursement.
“Everyone that initially applied for the grant would have to do it again. During the former procedure, they were not asked serious questions, they were only told to register but now we are asking specific questions on how the money will be utilised, the business turnover per month. It is via those questions we will be able to sort out real businessmen and fake ones”, he stated.
According to the report, over 200,000 small-scale businesses had earlier signified their interest to obtain the credit facility with successful applicants receiving emails from the bank.
The alarming rate of small scale business mortality in the country has been a reoccurring issue with the SMEDAN DG revealing that around three million businesses were lost due to varying factors such as insecurity, fraud, global competitiveness and lack of ease of doing business in the past few years.
Financial experts had expressed the view that with improved access to finance, more small business will become drivers of economic progress and important contributors to employment as well as economic and export growth.
As the economic condition continues to bite, a group of young entrepreneurs has extended support to some vulnerable Nigerians via a feeding scheme.
The group said in a statement that the initiative is aimed at providing nourishment to those in need, while drawing inspiration from the teachings of Jesus Christ.
A total of 820 individuals benefited from the programme, enjoying a diverse menu which included Chinese spaghetti, jollof rice, white rice, fried rice, and various soups.
The group from the Redeemed Christian Church of God Youth Church in Ikeja, Lagos, said the act reflects the commitment of the young entrepreneurs to make a positive impact on their community and address societal needs.
The initiative aligns with the Christian Social Responsibility mandate advocated by The Redeemed Christian Church of God, which emphasize the importance of demonstrating love and compassion to uplift communities and individuals.
Part of the statement reads, “The gesture is also in line with the Christian Social Responsibility mandate from The Redeemed Christian Church of God as a mission to meet societal needs through the demonstration of love that positively impacts communities and individuals to make a meaningful mark on the lives of individuals and families, spreading hope and nourishment in the community which is done at least once a month.
“This was led by the Provincial Youth Pastor of Province 1, Pastor Bisi Akande alongside Pastor Femi & Life Oyewunmi, Pastor Shola & Derayo Oladejo and Pastor Leke Adeboye & Titilope Adeboye”.
The Nigeria Customs Service (NCS) has deepened its relationship with its Benin counterpart in enhancing trade.
This follows a meeting held last Thursday between a deligation led by the Comptroller-General of Customs (CGC), Bashir Adewale Adeniyi, and his Republic of Benin counterpart at the Director-General of the Customs Administration of Benin Republic to strengthen collaboration between them.
The primary focus of the meeting, as outlined by the Customs boss, was to deliberate on strategies aimed at amplifying trade activities between the two nations and ensuring the seamless implementation of recommendations previously discussed during their rendezvous in Cotonou.
Highlighting the significance of the collaboration, the CGC said, “We are cognizant of the established framework for cooperation between our respective customs administrations.
“This framework was established at a higher level by the authorities of the heads of State, President Patrice Talon of Benin, and His Excellency President Bola Ahmed Tinubu of Nigeria, both expressing a desire to work together.
“It is upon this foundation that the Customs of both countries are united in their efforts”.
The Director-General of Benin Customs Administration, Mrs Adidjatou Hassan Zanouvi, in her remarks reiterated their steadfast commitment to executing the mutually agreed-upon measures.
Mrs Zaniuvi emphasised the importance of thorough monitoring to ensure effective implementation.
She noted that collaborative endeavours between the Nigeria Customs Service and the Benin Republic Customs Administration serve as a testament to their shared commitment to facilitating seamless trade operations and ensuring the efficient management of cross-border activities for the mutual benefit of both nations.
The CGC seized the opportunity to inspect ongoing projects within the Nigeria Customs Service, Seme Area Command.
He was accompanied by the Customs Area Controller, Seme Border, Comptroller Timi Bomodi.
By: Nkpemenyie Mcdominic, Lagos