EnuguSME, Author at Enugu SME Centre

Innovators Engage Investors At Fintech Webinar.

Innovators Engage Investors At Fintech Nigeria StartUp Funding Webinar

The Fintech Association of Nigeria (FintechNGR) recently held its monthly webinar themed, “StartUp Funding Webinar:

Innovators meet Investors, Who part with a Deal?” The association sought to educate participants on how to move from having an idea to moderating execution and obtaining funding.

FintechNGR members noted that startups play a major role in the development of an economy; however, the odds against startup success are usually higher, as they attempt to survive in very tough business environments. Statistics show that 31.5% of startups fail in their first year (Investopedia, 2020), as part of its mission of driving Fintech growth, FintechNGR partnered with a few organizations to include a startup pitch in its webinar in February 2021.

The webinar explored the varying challenges that accompany fundraising, navigating grey areas with VCs, out-of-the-box techniques to getting startup capital, legal issues associated with funding, and also live pitches with real investors.

Participants also got to learn some of the different regulatory frameworks applicable to certain industries that they need to pay attention to as startups as well as available programs and funding rounds available from partner organizations.

Also, startups were allowed to interact with investors, receive feedback on their ideas, and started investment conversations that could lead to funding. Phone POS, Palate Hub, The Bells Global, Crediometer, and a few others were some of the startups that participated in the 5-minute pitch session with the investors.

With panelists drawn from across different sectors- Adenike Sheriff, Principal, Future Africa, Mrs. Ashimi Tonbofa, Partner Tonbofa, Nsikak John, Head, Enterprise Innovation, NSE, and Dolapo Agbaje, Vice President, APIS Partners, the participants were equipped with in-depth practicable learning that could be easily put to work in their startups.

MSMEs: Deepening access to capital…

Deepening access to capital for Nigerian MSMEs during a pandemic

While Nigeria has, so far, seemingly been spared the public health onslaught created by COVID-19, the country has not escaped the urgent economic crisis created by the pandemic.

Worse, hardest hit have been the micro, small, and medium enterprises (MSMEs), whose operations are largely traditional and dependent on physical contact with their consumers and partners.

Over 40 million MSMEs exist in Nigeria, employing over 80 percent of the country’s population and contributing about 50 percent of the country’s GDP. Now, the biggest threat to the survival of these businesses central to the economy lies in their physical approach to interacting and transacting, which has left them unprepared to take advantage of the opportunities offered by digitization as well as vulnerable to the lockdowns and distancing measures intended to stave off the health crisis.

Financial exclusion—especially among micro-entrepreneurs in the informal sector— was a national concern even before COVID-19 made in-person interactions hazardous. To address this issue, prior to the pandemic (as far back as 2017, in fact), large-scale microcredit interventions such as the Government Enterprise and Empowerment Program—in which the Bank of Industry (BOI) participates—have been targeting four economic segments—market traders, artisans, youth, and farmers—for increased financial inclusion. Technology has been key: By leveraging the power of data, biometrics, and mobile wallet systems, and with an extensive network of over 17,000 agents, BOI has been able to identify, target, and deliver micro-credit to over 2.4 million MSMEs across Nigeria. Remarkably, over 52 percent of the beneficiaries are female. In the process, the bank has onboarded an additional 500,000 beneficiaries onto the formal financial system—essentially using technology to break the barrier of access to finance and financial services for underserved demographics.

At the onset of the pandemic, our bank’s immediate objective was to ensure business continuity by deepening our MSME activities through the provision of innovative lending solutions to new customers. Through our microcredit platform, BOI’s agent network—spread across the country—operate as proxies enabling beneficiaries to efficiently interact with technology and have their businesses captured and digitized in records. These agents, equipped with smartphones loaded with the bank’s data-driven applications, engage informal entrepreneurs by capturing their Know-Your-Customer details, profiling their business, tracking transaction histories, and monitoring income and spending patterns—thus providing financial solutions tailor-made to boost financial literacy, improve credit worthiness, and support their micro-businesses with funds, especially during these difficult times.

First trade deficit in 4yrs as COVID hurts exports

Nigeria records first trade deficit in 4yrs as COVID-19 hurts exports
Africa’s largest oil producer posted a N7 trillion trade deficit in 2020, with exports falling as much as 35 percent, according to data published, Tuesday by the National Bureau of Statistics.

For the first time in four years, Nigeria’s trade position was negative in 2020 as the pandemic crushed oil demand and sent the revenues of oil exporting countries tumbling.

Africa’s largest oil producer posted a N7 trillion trade deficit in 2020, with exports falling as much as 35 percent, according to data published, Tuesday by the National Bureau of Statistics.

That compares to a surplus of N2.23 trillion recorded in 2019, with imports outweighing the county’s value of export.

A trade deficit occurs when a country’s imports exceed its exports during a given time period.

When that happens, the said country is denied the gains of foreign exchange which comes from the exports of commodities to other trading countries.

The huge trade deficit largely explains why Nigeria’s naira ran into troubled waters last year as Africa’s most populous nation was starved of the needed foreign exchange that would have helped in the accretion of the external reserves, and give monetary authorities the legroom to defend the naira from falling against the dollar.

Nigeria’s trade balance stood at N32.4 trillion with imports rising 17.32 percent to N19.9 trillion in 2020 from the N16.96 trillion in 2019, while exports fell 34.75 percent to N12.5 trillion from N19.2 trillion in 2019.

The last time the country witnessed a deficit in its trade was in 2016, when a collapse in the oil market and a restiveness back home in the Niger Delta region, slowed the growth of oil exports, the country’s biggest export commodity.

At that time, Nigeria recorded a deficit of N290 billion.

Nigeria can save N3.7trn by gutting inefficient MDAs

Nigeria can save as much as N3.7 trillion every year by implementing the Stephen Oronsaye report’s recommendation to scrap or merge Ministries, Departments, and Agencies (MDAs) of government carrying out similar functions, according to a BusinessDay analysis.

This comes at a time the Federal Government is desperately seeking ways to cut governance costs due to low revenue from oil sales and the effect of the deadly coronavirus pandemic.

An analysis of Nigeria’s 2021 budget shows that a total of N5.3 trillion is allocated to all government MDAs. Since there are 541 of them, a back-of-the-envelope estimate puts the average spend of an MDA at N9.8 billion yearly.

Therefore, following the recommendation of the Oronsaye report, pruning the MDAs down to 161, Nigeria will only need to spend N1.6 trillion on them. This leaves the country with savings of N3.7 trillion.

However, scrapping inefficient ministries may not often translate to the full saving of the amount it would have otherwise have spent, but it presents a picture of what is possible if the government musters the political will to act.

A further analysis demonstrates how this is possible. By scrapping just 10 MDAs, whose functions are replicated by other government agencies, Nigeria can save N107.7 billion.

A breakdown of the 2021 budgetary allocation to 10 MDAs obtained from BudgIt, a civic-tech organisation that advocates for fiscal transparency and accountability, shows that scrapping them could save Nigeria over N107.7 billion.

Some of these agencies include National Emergency Management Agency (NEMA), Federal Character Commission, Public Complaints Commission, National Salaries, Incomes, and Wages Commission (NSIWC), and the National Productivity Centre (NPC).

Others are the Nigerian Building and Road Research Institute (NBRRI), Energy Commission of Nigeria (ECN), National Metallurgical Development Centre (NMDC), Nigerian Institute of Mining and Geosciences (NIMG), National Centre for Agricultural Mechanisation (NCAM).

This analysis validates the Oronsaye report, which concluded that Nigeria can save trillions of naira if it decides to reduce the cost of running its government.

Analysts say Nigeria’s biggest challenge is not necessarily spending more but that it is not spending better. For example, the billions of naira spent on salaries of government officials who perform similar functions across different agencies could be better deployed.

“Personal and overhead accounts for about 70-75 percent of our budget estimate and the remaining 25-30 percent goes into the capital expenditure; this shows that the cost of governance in Nigeria is very high across the three tiers of government,” Moses Ojo, chief economist at Pan African Capital Holdings Limited, notes.

Ojo adds that reducing that number will make the government have enough savings that will add more to the economy, especially in the area of infrastructure development, but that it could see sizable workers in federal civil service lose their jobs, which would compound the unemployment situation in the country.

SUNREF invites operators to tap $81m funding

SUNREF invites operators to tap $81m funding for off-grid projects

The Sustainable Use of Natural Resources and Energy Finance (SUNREF), a green financing line for businesses developed by the French Development Agency (AFD) is encouraging manufacturers to take advantage of the SUNREF funding facility.

The organisation in a virtual investors conference it hosted along with the Manufacturing Association of Nigeria (MAN) said that its SUNREF funding facility, which is composed of a €60 million ($70 million) lowcost debt financing, a €9.5 million ($11 million) grant facility and technical assistance provided to partner banks and project developers, will help to deepen Nigeria’s energy access.

The conference, which was hosted in partnership with development partners, the Nigerian Energy Support Program (NESP) implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and off-grid renewable
energy investor All-On, brought together investors, SUNREF Nigeria partner banks (Access Bank and UBA), technical assistance providers, renewable energy and energy efficiency project developers, government agencies and other stakeholders.

“The SUNREF facility has come at the right time when manufacturers need more power to drive our operations. We are excited about it as potential beneficiaries and we hope that both our members and non-members will take full advantage of this opportunity,” said MansurAhmed, the MAN President.

In his remarks, Wiebe Boer, CEO All-On, an investment firm, highlighted the huge market potentials in the renewable energy and energy sectors in Nigeria.

“The size of the energy gap in Nigeria is between 30GW and 175GW, and would cost between $40 billion to $200 billion to address. Nigerians spend $15 to $20 billion annually on power, which is ten times the grid,” said Boer.

“This is also a market opportunity for providers of constant, reliable electricity, such as mini-grids which are a potentially $10 billion market.”

In his remarks, Wiebe Boer, CEO All-On, an investment firm, highlighted the huge market potentials in the renewable energy and energy sectors in Nigeria.

“This is also a market opportunity for providers of constant, reliable electricity, such as mini-grids which are a potentially $10 billion market.”

Policies, Taxes Killing SMEs in Nigeria—Expert

Executive Director of Jos Business School, Mr Ezekiel Gomos, has disclosed that with the tough operating environment and high taxes in Nigeria, SMEs can never survive to propel national development.

Mr Gomos, speaking on Tuesday in Abuja at the 22nd Annual Conference of Certified National Accountants organised by the Association of National Accountants of Nigeria (ANAN), stated that small businesses were failing at the moment due to tough operating environment, including infrastructure, regulation, policy and taxes.

In his presentation titled ‘SMEs as Engine of Economic Development in Nigeria,’ the business school boss urged government to create business friendly laws, taxes, policies and regulations that would needed to encourage SMEs by needed to encourage SMEs by needed to encourage Small and Medium-scaled Enterprises by encourage SMEs in the country.

He noted that by doing this, the country’s economy would boom and more Nigerians will want to explore their God-given talents for national development.

At the conference themed ‘Sustainable Economic Management in a Recession: Issues, Strategies and Options,’ Mr Gomos said, “Nigerian SMEs cannot drive economic development in the 21st century with 20th century infrastructure. There is need to develop clusters or industrial parks with basic infrastructure for Small and Medium-scaled Enterprises.

“Also, on access to finance, there is need to make the processes and procedures to access finance less cumbersome and complex.

“We must find innovative solutions to unlock sources of capital, while the need for SME Credit Guarantee Scheme is long overdue.”

SOURCE LINK

Insurance Plan for SMEs in Nigeria

Small and medium-sized enterprises (SMEs) tend to cycle outside the insurance loop for reasons ranging from ignorance to cost.

Corporate calculations at the lower part of the enterprise ladder appear to be different from calculations nearer the top, resulting in smaller enterprises preferring to take bigger uncovered risk.

Insurance for small firms is like dashing into the rain without an umbrella the consequence could be uncomfortable, but the choice is more the result of the lack of knowledge than the lack of money.

Analysts in growing numbers are beginning to realise that small businesses do not insure their assets not because they do not want to, but because they cannot afford to, or so they think.

The problem with small enterprise insurance appears to be a perception of cost rather than an understanding of loss.

Smaller-sized entrepreneurs tend to cost their goods or services without considering cost of insurance, thereby undervaluing the cost of their goods or services.

The consequence is that in a time of crisis they end up sorry rather than safe.

Data from the Nigeria Bureau of Statistics (NBS) show that local SMEs contributed about 48% of the national GDP in the last five years.

With a total number of about 17.4 million, they account for about 50% of industrial jobs and nearly 90% of the manufacturing sector, by number of enterprises.

The NBS report suggests that SMEs support industrialization and employment.

More advanced economies have equally used SMEs to grow industries and promote development.

What is an SME? Running The Numbers

SMEs may look trivial, but they are the bedrock of several stable global economies.

Base research data indicates that the total cost of starting a micro enterprise (including working capital but excluding cost of land) is N5m but not exceeding N50m, with a labour size of 10 workers.

The total cost of starting a small enterprise (including working capital but excluding cost of land) is between N5m and N100m, but not exceeding N200 million, with a labour size of between 11 and 50 workers, while the total cost of starting a medium-sized enterprise (including working capital but excluding cost of land) is between N100m and N500m, with a labour size of between 51 and 200 workers.

Funding SMEs; The Search for Longevity and Stability

SMEs are usually faced with financial dark holes which have persistently led to their failure.

Despite a few federal and state-sponsored funding schemes for smaller businesses, several SMEs have hit the deck as they quickly run out of cash or find themselves buried under a heap of commercial debt.

Funding has been a key operational problem for SMEs as poor management capacity, weak record keeping, lack of operational transparency and no collateral conspire to keep SMEs out of the formal banking sector credit market.

Aside the lack of funds, other challenges that face SMEs include the lack of skilled manpower, multiplicity of taxes, high cost of doing business, and the low threshold for absorbing economic shocks.

…The Other Problems

Additionally, SMEs are confronted with risk-related issues ranging from, changing taste and preferences of consumers, economic vulnerability, infrastructural constraints such as poor power supply, inadequate supply of potable water, poor access roads, high cost of equipment, high rate of domestic inflation, management risk, marketing risk, reputation risk, natural disasters such as earthquakes, fire outbreak, and floods (especially in the farm belts), social unrest, and arson (like during the EndSARS protests).

As an entrepreneur the best way to manage risk associated with a business (asides risks associated with managerial or operational competence) is by getting an insurance cover.

It is important to note that risks might be the reason why a venture capitalist would not invest in a business.

Nevertheless, before getting an insurance cover it would be reasonable to profile the business’s risk to determine the appropriate insurance policy to buy.

Admittedly, some of the risks of businesses are unforeseeable (‘black swans’) while others are known but the timing is unpredictable (‘grey swans’).

In identifying risks, it is important to understand that SMEs are businesses in the private sector, and they cut across all industries so, the nature of risk varies according to the industry.

The responsibility falls on the business owner to identify the risk associated with the industry and purchase insurance that reflect those industry-specific risks.

Some risks are uninsurable, in this situation the entrepreneur would do well to still approach an insurance professional to help in assessing the impact of an unforeseeable loss on the type of business the entrepreneur is engaged in and review the best risk-protection strategy.

In such situations, small businesses could self-insure by saving money for possible future losses.

A variety of insurance schemes or plans are critical to risk protection of SME businesses the kinds of risk protection arrangements include: Liability Insurance, Business Property Insurance, Workers Compensation Insurance, Health Insurance, Life Insurance and so on.

All About the Plans

SMEs require standard fare insurance protection schemes some of which include the following:

Fire and Risk Insurance Plan

Fire and Risk Insurance is a vital insurance plan for SME in Nigeria.

It covers your business against, earthquakes, fire outbreak, tsunami, flood, social unrest, intentionally inflicted damages that may occur in the line of your business.

An example was what happened during the end SARS protest that affected business premises and markets.

This insurance plan will protect your business against loss or damage because of rain, flood, and storm.

Under this plan, your insurer will pay back all your losses, giving you the capital, you need to resuscitate your SME.

Nigeria to reward every diaspora dollar inflow with N5

Nigeria will reward every diaspora dollar inflow with five Naira additional payment as the country seeks to maximise foreign exchange flows from its citizens abroad.

According to a statement by the central bank, recipients of diaspora flows who use formal channels to get U.S. dollars from abroad, will be paid N5 fir every dollar received and this will be on top of proceeds of the cash sent.

It is the latest move by authorities to increase the flow of remittances amid a shortage of hard currency.

Recipients will get 5 naira for every $1 they remit through licensed international money transfer operators and commercial banks, the central bank said.

The program will run from March 8 till May 8.

The West African nation’s currency has been devalued twice since March last year after a sharp drop in oil sales and remittances from workers abroad led to a shortage of dollars.

Measures by the central bank to bolster inflows and a rebound in oil prices could reduce pressure on the currency, which last traded at 411 per dollar at the exchange platform for investors and exporters known as Nafex.

SOURCE LINK

Govt. Cushioning the Effects of COVID-19 on MSMEs

How the Nigerian Government is Cushioning the Effects of COVID-19 on MSMEs

The negative impact of the COVID-19 pandemic, particularly on Micro, Small and Medium Enterprises has been overwhelming.

According to research, over 90% of business owners agreed that they were adversely affected. Their cash flow, sales, revenue and salaries/wages took the biggest hit.
While a number of medium and small scale business owners are struggling to keep their heads above water, the resultant effect for the others is devastating. With fast depleted fund reserves, most businesses are forced to close. Employees are laid off, and business owners, disgruntled. Over 82.8 percent of businesses are likely to lay off one to five employees.

MSMEs play a pivotal role in Nigeria’s economic development. They are responsible for over 84 percent of job creation in the country. Therefore, a continuous decline in their sales and profit may trigger a major unemployment crisis in the country.
In order to mitigate such occurrence, the Federal Government introduced the MSME Survival Fund. It is a N75 billion conditional grant to support micro and small enterprises and safeguard jobs in the MSMEs sector. Launched in September, 2020, the Fund is a part of ₦2.3 Trillion stimulus package, known as the Nigerian Economic Sustainability Plan (NESP).

The MSME Survival Fund Scheme has the following categories:
• Payroll Support: assist vulnerable MSMEs in meeting payroll obligations of between ₦30,000 – ₦50,000 per employee over 3 months.
• Artisans/Transport Workers Support: provide artisans and transport business operators with ₦30,000.
• Guaranteed Off-take Scheme: Bulk purchase of products from MSMEs to protect jobs and livelihood.
• General Grant: Support the survival of 100,000 MSMEs most affected by the COVID-19 pandemic.
• Formalization Support: Provide free CAC Business Name registration for 250,000 new businesses.

The program actively promotes gender inclusion – with 45% of the fund going to women-owned businesses.
Since the start of the program till date, the MSME Survival Fund has achieved the following results:
• Provided Payroll Support of between ₦30,000 – ₦50,000 for 3 months to 320,678 employees from 64,395 companies across 36 states and the FCT.
• Given one-time grant of ₦30,000 to 96,157 artisans and transport workers in 36 states and the FCT.
• Provided free business registration with CAC for 140,531 bMSMEs across the country.
Several beneficiaries across the country are thankful to the government for providing this timely intervention.

Mrs Nwodo Uche, the CEO of Andertek Global Roofing Ventures in Lagos State had this to say: “When one of our staff received her first payment from the Payroll Support, she was so elated because we had not been able to pay salaries for some months. It was really a welcome relief for us as a business and for our employees. The payments our staff received for three months seriously helped to cushion the effects of the pandemic. Our gratitude goes to the Federal Government for remembering small businesses in these trying times.”

Mallam Usman Ibrahim who is into fruit production in Kano State shared his experience: “I heard about the Survival Fund from one of my friends. I had to ask one of my staff to help us apply online and upload all our documents. I had ten employees before but I had to downsize to five, due to the effects of COVID-19. When we received our first payment in November, all my staff were so happy. We continued to receive the payments in December and January. It has helped us so much. Sales has now picked up this year and we can now afford to pay our staff again. I am grateful to the government for helping us, just at the time we needed it.”

Mrs Victoria Jashi, the head of Goodnews School in Gombe State was effusive in her praise for the government’s timely intervention: “We really thank the Federal Government for their help. Schools were not open for a long time and it affected our ability to pay salaries. The Payroll Support allowed us to register 10 employees which is the maximum per organization, although we had a staff strength of 52 employees. Every month that we received the payroll support, we brought all the funds together and shared it among all the staff. We just wanted everyone to partake of the benefits.”

Digital identity policy key to driving insurance growth

Mandatory digital identity policy key to driving insurance growth – Experts

Experts in Nigeria’s tech and insurance sectors have called for a policy mandate to make digital identity compulsory for insurance.

This was the highlight of the second edition of Digital Identity Matters, a thought leadership webinar series for driving conversations on contemporary issues in identity tech.

The event was sponsored by VerifyMe Nigeria, a leading identity verification and Know-Your-Customer (KYC) technology company, in partnership with Tech Cabal, a future-focused publication that speaks to African innovation and technology in depth.

Panellists included: Esigie Aguele, co-Founder/CEO, VerifyMe Nigeria, Bayo Adesanya, Chief Digital Officer, AXA Mansard and Adia Sowho, Chief Executive Officer, Thrive Agric. Tunji Andrews, co-Founder, Awabah moderated the discussion.

Speaking on the theme: Why Insurance is Important for the Growth of Nigeria’s Digital Economy, Aguele disclosed that the Nigerian insurance market has a $100 billion potential and can become one of the biggest sources for internally generated revenue if properly harnessed.

He said: “Insurance penetration in Nigeria is currently at about 1%. For a population of 200 million people, we only contributed $1 billion to Gross Domestic Product (GDP) last year. South Africa, which has a third of Nigeria’s population, has a penetration of 17 percent and a GDP contribution of $50 billion. It is obvious that stakeholders must put in efforts to ensure that insurance is available to more people to grow the digital economy.

Enugu SME Centre

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