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Raising stake in SMEs financing, growth in Nigeria

by with No Comment Businessfinance

From unemployment reduction to its contribution to government revenue, the benefits of a well-developed Micro, Small and Medium Enterprises (MSME) sector can never be over emphasized. Given their contributions, nations have set out plans to develop the MSMEs sector to achieve economic growth.
  
In high-income countries, MSMEs contribute well over 65 per cent of employment and about 48 per cent to the GDP, while in low-income countries; they contribute to about 30 per cent of employment and about 15 per cent of GDP.
 
READ ALSO: How Rwanda plans to enhance SME corporate governance


MSMEs have been generally acknowledged as the backbone to the success of developed nations, gaining popularity through the success rates in such developed economies that invested in the sector.
 
There also exists a relationship between the informal sector, MSMEs and economic development. In low-income countries, the contribution from the informal sector is rather high, unlike high-income countries where the contribution from the informal sector is low.

This gives room for the development of the informal sector, to reduce the gap between the formal and informal sector and allow the poor to actively participate in the economy
  
For the Nation to be among the 20 most economically advanced nations in the world by the year 2020, serious attention must be paid to the development of the MSMEs sub-sector in Nigeria
  
The contributions of MSMEs to the economic growth of countries have been very significant. SMEs are viewed as an engine of growth that contributes enormously to the nation’s Gross Domestic Product (GDP) employment generation, industrial output poverty alleviation, export promotion, and self-independence
 
In Nigeria, despite the fact MSMEs has been identified as a tool for economic development and provision of employment, variety of challenges seems to have a negative impact that constraint MSMEs from playing the vital role of stimulating economic development.
 
To this effect, First Bank of Nigeria Limited, Nigeria’s most valuable bank brand has over the years demonstrated an unwavering commitment to the business success of SMEs in Nigeria.
  
At the just concluded Ehingbeti, the Lagos Economic Summit, the Group Chief Executive Officer of First Bank, Adesola Adeduntan said the bank has a cocktail of products and bespoke solutions, specifically designed to help grow and sustain SMEs; enable them play out their business activities as well as fulfill their goals and aspirations.

In addition, the bank offers advisory services that are tailored to meet the needs and aspirations of their SME customers.
  
He said the bank is enthusiastic about the SME segment as one of the strategic platforms to stimulate economic development.
  
“We have SME CONNECT portal which serves as a advisory services platform to help them up their skills, supporting them to make accurate decisions and a number of banks have similar support system. We refine and update the portal. Our SMEs portfolio is quite sizeable considering Nigeria’s population.
  
“Our support for relevant businesses helps us come far especially the SMEs. We have been active in providing various financing instruments. The path to growth and development of the Nigerian economy is growing the SMEs segment,” he said
   
With a bouquet of bespoke products and services, First Bank is set to place SMEs ahead of their competition through collaborations with the business owners to provide flexible and dependable services, helping each SME fulfill life time dreams for their businesses.

Source: Newscentric

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RSE CEO: How Rwanda plans to enhance SME corporate governance

by with No Comment Business

Watch Full Video Here!

Small and medium-sized enterprises often find it hard to access long-term investment capital. One of the reasons is that SMEs lack corporate governance. Rwanda has a plan to attract SMEs to list on stock exchange, and a new SME Governance Guidebook offers promise. Celestin Rwabukumba, CEO, Rwanda Stock Exchange joins CNBC Africa for more.

SOURCE: CNBC AFRICA

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P&G, FMITI, BoI, others empowers SMEs at the 2021 P&G – BoI SME Academy

by with No Comment Business

Vice President Osinbajo, Minister Adebayo, industry leaders provided insights and training during the virtual event.

Lagos, Nigeria. February 2021: Leading consumer goods company in Nigeria, P&G, in partnership with the Federal Ministry of Trade and Investment (FMITI) and the Bank of Industry (BoI), provided access to trainings for over 700 SMEs during the 2021 P&G – BoI SME Academy. The first day and launch of the Academy took place on the 12th of February 2021.

READ ALSO: How the Nigerian Market can Support MSME Financing

The plenary session themed ‘SME Development and Growth as a Precursor to Nation Building’ brought senior government and private sector leaders to discuss proven strategies that can be leveraged to drive the growth and development of local SMEs as the bedrock of Nigeria’s economic development.

In his keynote address, Vice President Yemi Osinbajo, stated that,  “The Federal Government believes wholeheartedly that SMEs are the bedrock of the economy and we are constantly aiming to support innovations that can help SMEs grow and in turn groom the economy and provide job opportunities. The government has been working diligently and creatively on engaging the most vulnerable businesses especially during this current crisis. We thank P&G and BoI for this proactive initiative designed to ensure a better Nigeria”.

Also, the Minister for Industry, Trade and Investment, Otunba Adeniyi Adebayo reiterated the need to create a favorable business environment for SMEs in Nigeria: “The Federal Ministry of Industry, Trade and Investment is committed to providing SMEs the required support and trainings needed to consistently project their businesses in an upward trajectory. We achieve this through information-driven support vital in building a better playing field for commerce in the entire nation. We are grateful to organizations like Procter & Gamble for their continuous efforts towards transforming their communities of operations through proactive projects like the SME Academy”.

In his remarks, the Managing Director, P&G Nigeria, Mr. Adil Farhat highlighted the need to continuously support SMEs in Nigeria as they have the potential of outrightly transform the country. Mr. Farhat added that “in line with the focus of Nigeria’s economic recovery and growth plan to drive industrialization and economic growth through globally competitive SMEs, P&G in collaboration with the Federal Ministry of Trade, industry and investment and the Bank of Industry launched the SME Academy to improve their standard, ensure longevity, and facilitate integration into global value chains. For over 27 years in Nigeria, P&G has consistently partnered with the Nigerian government to promote strong investor policies and practices that drive inclusive growth, jobs, and welfare of Nigerian citizens”.

Furthermore, the Managing Director/Chief Executive Officer of the Bank of Industry, Mr. Olukayode Pitan, in his presentation reiterated the importance of the SME Academy especially during this challenging economic situation across the globe. “The maiden edition was held in October 2019. This second edition and first virtual event has been expanded to incorporate structured trainings. This initiative has become particularly important in this era of the covid-19 pandemic and current global economic challenges, which has left many SME businesses struggling to survive now. The Bank of Industry remains committed to transforming Nigeria’s economic sector through funding, strategic partnerships and strengthening of our technology and operations”.

This year’s SME Academy also featured key stakeholders in the industry including Ms. Yewande Sadiku, the Executive Secretary/CEO of the Nigerian Investment Promotion Commission; Mrs. Bola Adesola, the Senior Vice Chairman for Africa at Standard Chartered Bank; Mrs. Tara Fela-Durotoye, the CEO of House of Tara International; and other experts on procurement, investment facilitation, and access to finance.

Over the years, P&G has maintained a significant manufacturing investment in Nigeria with their plants in Lagos and Ibadan and general offices in Lagos. The organization’s operations generate over 4,000 direct and indirect jobs and create over 300 SMEs with sustained training programs. The people are its greatest assets with over 95% local employees and 50% female representation at managerial levels.

Source: The Sun

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INITIAL INFORMATION SHEET ABOUT THE NIGERIAN YOUTH INVESTMENT FUND (NYIF)

by with No Comment Business

1. The Federal Executive Council on Wednesday, July 22, 2020, approved the establishment of the Nigerian Youth Investment Fund, N-YIF. The Youth Fund is dedicated to investing in the innovative ideas, skills, talents, and enterprise of the Nigerian Youth and aimed at turning them into Entrepreneurs, Wealth Creators, and Employers of labor contributing to national development. President Buhari led the Federal Government to consider Nigerian youth as a resource to be harnessed and not a problem, hence the initiation of this Fund.
2. The Fund will serve as a catalyst to unleash the potential of the youth and enable many of them to build businesses that will employ and in turn empower others. A multiplier effect of economic expansion and growth required to thrive in an increasingly competitive and connected world where adding value is the only sustainable pathway to success is expected to be achieved.

3. A minimum of N25 billion each year in the next 3 years, totaling N75Billion will be required to ring fence the N-YIF. For the remaining part of 2020 an initial sum of N12.5 billion will be needed to kick start the N-YIF.  It is expected that successive governments will keep the Fund, akin to a Youth Bank, alive.

4. The Nigerian Youth Investment Fund (N-YIF) is a ringfenced Fund that will strictly cater to the investment needs of persons between the ages of 18 and 35 years old. It is a restricted Fund that can only be used for the set purpose of Youth Investment.

5. N-YIF joins a slew of Youth-oriented programmes by President Buhari to combat youth unemployment with the objective of driving innovation, fueling the creation of entrepreneurship and support youth SMEs.   

6. N-YIF provides a single window of Investment Fund for the youth thereby creating a common bucket for all Nigerian youth to access Government support. Providing a less cumbersome access to credit and finance for the average Nigerian youth with an approved work plan or business idea will help lift thousands of the youth out of poverty and birth a whole generation of entrepreneurs. 

7. The fund aims to reach 500,000 youth annually between 2020 and 2023.  Each fund approval will range from N250, 000 to N50, 000,000, with a spread across group applications, individual applications, working capital loans set at 1 year and term loans set at 3 years with single digit interest rate of 5%.  The funding will be a single digit facility with a moratorium for a year and payable over a designated period. Some businesses may have longer repayment cycles but again the criteria will be clear and appliance to all.

8. Disbursement will be through various channels, which will include Micro Credit Organizations across the country under the Central Bank of Nigeria supported by BOI, Fintech Organizations and Venture Capital Organizations, registered with the CBN.

9. N-YIF will use proven disbursement frameworks but with special conditions with respect to the youth. There will also be a residual advisory facility for applicants and beneficiaries.

10. Usually, Youth funds focus aggressively and singularly on only rapid growth businesses. But N-YIF will invest in businesses that have deeper value than only money. Such businesses must however be viable and able to fulfill all criteria to ensure the fund does continues to expand and serve like a production factory for businesses, but it will encourage creative arts, culture focused businesses because Nigeria needs to start rediscovering the beauty and depth of its culture.

11. The Fund will have a converted analytics framework so that it is possible to see where investments are flowing and calibrate according to the local and global a market demand. The evidence presented in terms of what some amazing youths had achieved locally and globally contributed to the berthing of this fund.

12. Youth seeking to benefit from the fund must have a fundable business idea, registered business, be a citizen of Nigeria, present recognized means of identification and guarantors. The safeguards built around some specifics being crafted around the fund will ensure that potential beneficiaries do not need to know anyone or be “connected” to access the fund. We must prove to our youths that equity is possible regardless of gender, ethnicity or religion. You simply have to be a Nigerian within that bracket with a bankable business plan. Investment will be supported on the strength of the business case and will follow a scoring template and a transparent evaluation process driven largely by technology.  We will have a template that will be used to engage and accommodate the not too literate youth who also have brilliant ideas.

Gabriel Aduda
Permanent Secretary
FMYSD