The best of business widely found in developing countries are
sales of finished products.
These products, irrespective of their origin of manufacture, are
becoming a mainstay of economies of these countries.
These transactions affect GDP, international trade balance,
international politics, among others.
But when the difference in value between a country's imports and
exports, regarded as balance of trade is not favorable to you and your country
(trade deficit), there is a gap of either an opportunity or problem.
BREAKDOWN of Balance of Trade
A country that imports more goods and services than it exports has
a trade deficit. Conversely, a country exports more goods and services than it
imports has a trade surplus. The simple formula for having the upper hand
(trade surplus) is to export more than import.
Not that developing countries are not producing at all but narrow
range of primary products and few export markets cannot sustain the chuck of
raw cash huge importation is draining from their economy.
In the face of recession, cash straps, technical know-how, a vital
ingredients to achieving this giant height is fearfully edging to the cliff.
How then can the balance of trade reflect positive?
According to Chris Papageorgiou (Deputy Unit Chief), Lisa Kolovich (Project Officer) and Mr. Nolan (Deputy Director in the
Strategy) all of Policy and Review Department of the IMF, pursuing export
diversification is a gateway to higher growth for developing countries.
Upgrading quality in production is a function of fund injection
into the process of production. Funds which are readily available with
financial houses spread all over the country.
The race for survival, especially in the financial sector due to
the crazy fluctuations of exchange rate is adversely affecting the creation and
consideration of SMEs and low interest rates which is keen to the growth of
this sector, the industry and balance of trade.
It is these chains of reactions that are holding down balance of
trade at negative, making developing countries remain ‘developing countries’.
Combing the length and breadth of the Western states of Nigeria,
the story of SMEs continuous challenge at the lower part of production ladder
is mostly the same.
SMEs and Financial Institutions
The relationship between smes and financial institution, today in
Nigeria, is a commercial, strictly profit for business relationship.
The financial institutions on one hand are sourcing for their
capital both locally and internationally, the later which exposes them to
undeserved forex hyper-fluctuations.
The smes, with nowhere to go, are cornered to securing
neck-cutting loans that are neither their sector’s friendly nor break-even
oriented.
Government
Intervention
In other to affect the economy beyond administration and
enforcement, provision of public goods, government direct and sustained
intervention in funding smes is highly required.
These interventions will help the SMEs to gain a foot in the
production mud, help deserted sectors and producers to venture into areas of
manufacturing that involve capitals which, if seek at private institutions,
kills it.
The government of Nigeria today, is awake to it direct
intervention responsibility, giving grants here and there to badly needed
economy.
However, these same grants, intervention are news to many of my
friends found in all sectors of the economy.
Very few of these grants are highlighted below. Noted is that
these grants come with a single digit interest rate for twelve months. Among
the lowest being the Lagos State Employment Trust Fund of 5% interest per year.
BoI Funds
If there is anywhere entrepreneurs can get cheap or single-digit
funds (often at nine percent lending rate), it’s from the Bank of Industry (BoI)
who has a N5billiob fund from Aliko Dangote to finance SMEs at a single digit
rate.
This development finance institution (DFI) has been rated by many
local and international agencies as one of the best managed banks in the world.
The BoI has a number of funds that entrepreneurs of all levels can
access among which are
i.
Graduate
Entrepreneurship Fund (GEF), which is meant for serving members of the National
Youth Service Corps (NYSC). Candidates are allowed to submit their business
ideas, which are then reviewed by a team of experts. The NYSC members whose
ideas are marketable and bankable are then selected, trained for four weeks and
then given between N500,000 and N2 million.
ii.
There
are also the Cottage Agro Processing (CAP) Fund for small and medium agro
processors; Nolly Fund for players in the Nollywood industry, as well as
Fashion Fund for designers and other players in the value chain.
iii.
BoI
also has other matching and managed funds, including a fund for the automotive
industry. Through 122 business development experts, entrepreneurs can access
funds easily.
These funds and more are easy to access through its website, www.boi.ng
Tony Elumelu Fund
Tony Elumelu Foundation has $100 million for 10,000 African entrepreneurs.
This will continue to be available for another seven to eight years. If you are
in agriculture, fashion and design, light manufacturing, ICT, and solid
minerals, among others, then apply for the on-going Tony Elumemu fund.
You can be lucky to be one of 1,000 entrepreneurs to be shortlisted.
Through the Elumelu fund, Momarr Mass Taal, the CEO of Tropingo
Foods in The Gambia, who got $5,000 seed capital in 2015, turned his enterprise
into a $1.2 million revenue business.
These funds and more are easy to access through its website, www.tonyelumelufoundation.org/
GroFin Fund
GroFin, a development financier, has committed over $500 million
to funding Nigerian micro, small and medium business (MSMEs) across the
country.
The firm has five different types of fund: the Aspire Nigeria
Fund, the Growth Africa Fund, the Small Growing Business Fund, the Aspire Small
Business Fund and the Aspire Growth Fund.
The Aspire Nigeria Fund, the Growth Africa Fund and the Small
Growing Business Fund cater for all parts of Nigeria except the Niger Delta.
The Aspire Small Business Fund provides a minimum of $100,000 and
a maximum of $1.5 million to SMEs in Nigeria.
The Aspire Small Business Fund and the Aspire Growth Fund cater
for the Niger Delta.
The Aspire Small Business Fund provides between $10,000 and
$100,000 to small business owners in the oil-rich region, while the Aspire
Growth Fund frees between $100,000 and $3 million to businesses to stimulate
growth in the area. GroFin provides its funds mostly for a maximum of six
years.
These funds and more are easy to access through its website, www.grofin.com/
Shell LiveWire
The Shell Petroleum Development Company of Nigeria Limited
has a number of funds for young entrepreneurs, including women.
Through the programme , Shell provides support, access to
training, guidance, and business mentorship to young entrepreneurs and
potential entrepreneurs between the ages of 18 and 35.
The programme operates mainly in the Niger Delta region and aims
to inspire, encourage and support young people to start up their own businesses
through the provision of finance and training for young entrepreneurs,
according to Shell.
These funds and more are easy to access through its website, https://www.shell-livewire.com
Lagos State Employment Trust Fund
Lagos State has N25 billion to support SMEs. The fund is divided
into two categories; micro and small businesses. Under the micro, businesses
can access up to N500, 000 loans with an interest rate of five percent and a
tenor of one year. For the small business category, businesses can get up to N5
million for a tenor of three years.
The criteria for accessing the funds include:
Lagos State Residents Registration Agency (LASRRA), Lagos state
residency slip
Lagos State tax receipt,
Utility Bill and Means of Identification
These funds and more are easy to access through its website, www.lsetf.ng/
Social Intervention Fund of FG
A total of N6 billion was allocated under the Social
Intervention Fund of the 2017 budget. The criteria for accessing the fund
include membership of a business organisation. The fund is for artisans and
owners of micro businesses. The artisans of business owners can only access a
maximum of N100, 000 at three percent interest rate on a year tenor.
These funds and more are easy to access through its website, www.boi.ng/boi-products/fgn-special-intervention-fund-for-msme/
Oxfam
Oxfam has a number of funds for Nigerian entrepreneurs. Oxfam, an
international confederation of charitable organisations focused on the
alleviation of global poverty, recently disbursed €100 million to high-impact
SMEs in Nigeria through Nextzon
These funds and more are easy to access through its website
https://www.oxfam.org/en/countries/nigeria
INFORMATION TO THE GENERAL PUBLICS
Serious sensitization exercise is needed to compliment
governments’ efforts as this is one of the main challenges while people are
stuck as to where to get the best aid to lift their businesses from small size
to blue-chips.
Developing countries where these grants exist need to understand
that spending a sizable amount of fund on educating the publics is as vital as
the grant availability.
MY FIRST-HAND EXPERIENCE
OKE-ARO
PIGGERY FARM
The Oke-Aro Piggery farm, is said to be one of the largest piggery
farm in Nigeria, situated in Ogun state under Ifo Local government and about 18
minutes’ drive from Agege Lagos.
About 1000 farmsteads housing several smes’ piggeries on 50 acres.
The settlement is managed by a cooperative that consist of 15 associations.
Each association is made up of about 30 members.
Till the time of my visit, the Oke-Aro Piggery farm is serviced by
microfinance banks and cooperative society who offer commercial loans.
It should be noted that the business of piggery, well classified
as Agricultural business require, among others, a gestation period that is
non-existing with commercial loans thus giving farmers headache of how to repay
loan when such facility is yet to yield any profit.
OWODE ONIRIN IRON AND MOTOR PARTS DEALERS, LAGOS
Known for it ever available motor parts and construction site for
any engineering design, model and otherwise doubt the Japan of Nigeria, Owode
Onirin boast to be a neck and neck competitor for any technology institution in
Nigeria as workers on this 20aches ‘iron land’ can bring to reality any
construction designs; engine, rotor, shaft or blade, anything that can be
sketch will become reality.
The size and value of Risk asset in this market alone is close to
$900,000 when considering commercial loans. The availability and injection of
single-digit funds will enable the market to expand to about $2.5 million in
just 2 years and it will continue to grow.
“The major challenge”, said Prince Oriola, Line D Chairman and the
overall Secretary of the Association, “is that we can’t get materials and
stock, many times, we lose business because we only restock when buyers pick
the ones on display”.
Availability of fund would not only give room to stock irons and
other goods, it will enable these dealers to construct prototypes of different
equipment, engines, spare parts etc which could have come with a name and the
rest would have been history.
MILE 12 PEPPER SELLERS, LAGOS
The market main display board reads “MILE 12 FOOD and OTHER
PERISHABLE ASSOCIATIONS”. Truly, when you visit the dumpsite of the market, it
is a heap of edible good that are rotten.
And I asked, “Why do these good needs to perish?”
Speaking with the Chairman of the market, Alhaji Haruna Usman, I
was made to understand that the infrastructure needed to preserve or process
pepper and other perishable goods coming from the north cannot be finance by
the widely available commercial loans.
I also noted that the volatile location of the market, once an
outskirt of Lagos but now within the ever growing city of Lagos, is giving the
government ache and there has been on and off call for relocation of the
market.
These and many more mean that processed food, flavor found in many
supermarkets will continue to come from overseas while only instant edibles
ones are consume locally.
Again, a wide gap as a result of the sort of fund available for smes
that have potential to become blue-chips.
FARM SETTLEMENT, IKORODU, LAGOS
Yussuf Azeez is a graduate of Ahmadu Bello University, Zaria,
Kaduna, Nigeria. Since his undergraduate days, he brings livestocks from the
north to Lagos in the South (his base). After his first degree, he joins the
league of Farm Settlement and I was able to see his goats and cows blossoming
under the shade of a mango tree in his farm.
I met Yussuf through a colleague, Doyin, who said the former is in
need of professional advice as he wishes to take his business to the next
level.
After an hour and a half discussion, I understand Yussuf and his
quest to a level that I introduced him to the LSETF.NG fund.
This will enable the young man to build a farmhouse with one
housing breeders among others.
Series of meeting with other farmers within the complex yielded
additional grants for about 12 farmers while others, I bluntly told, are better
managing their business as it is.
CONCLUSION
Educating the public is more important in the fight to push
developing countries out of the abyss they currently find themselves.
This job is a collective one and the government, just like in the
case of grants; need to be at the forefront.
We wish you all the best. Don't hesitate to contact us via the channels listed below...
Don Odedeyi Abiodun
Twitter: @donabiodun
Email: abiodunodedeyi@gmail.com
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