The Nation Newspaper

Category: Small Business and Entreprenuership

  • Start-ups with small capital outlay

    Start-ups with small capital outlay

    The soul of any nation lies in its entrepreneurs, its small business. It is to this invisible army that a country’s economy thrives or sags, yet they are the teeming millions, unknown. Meet some bare entrepreneurs, coming as bare as they come. If  there is a need to be filled, there is a business to do and money to be made. And millions of Nigerians, from selling recharge cards to operating barbing salons, to selling foods on street corners, daily engage in business, transforming lives, a naira at a time. Joe Agbro Jrn. Lanre Williams and Tolulope Ogidan write on start-ups requiring little or no capital, the Nigerian businesses operating lo

    It is generally accepted that water is life – it hydrates the body, washes it, and used in cooking, washing, recreation and in various other settings. But, to Mariam Moshood, water represents a livelihood. She began trading in the business of selling pure water in 2009 and her initial capital was N2,000. With this amount, Moshood could purchase 25 bags of pure water and also get two extra bags.

    “Then I ordered from Kofo Water Company,” she said. “Now, I am collecting from Providence Water Company.”

    However, owing to the fact that only few are likely to ask for pure water that isn’t cold, like complaints from many businesses, Moshood says electricity has been the bane of her business.

    “You know we don’t have stable electricity here, so it serves as a problem because most of my customers want it (sachet water) cold,” she said.

    “I have to get a generator, to meet my customer’s need and that solve the problem.”

    Despite all these heckles, for Moshood, it is her daily hustle, what brings the daily bread. And she is pleased. “The rate of income is good and profitable,” she said, sweeping her hands across her wares. “As you can see that it has fetch me all these, I am not selling only pure water, now I am selling table water and soft drinks.”

    In the case of Afolabi George, after leaving secondary school, the chances of furthering his education was bleak. Hence, he opted to go into the business of rentals. And his business, Afo Rentals, specialising in renting chairs, tables, and canopies, was started in 2005. Without any previous knowledge of the rental business, Afolabi said he was introduced to the business through a friend of his, who was into the business. He also got involved because of the profits to be made.

    Eight years on, the business he started with N50, 000 is growing and now employs five people. And he advises that anyone interested in running a rentals business should set aside a minimum of N50, 000 for a standard set-up.

    Citing the biggest challenge confronting the business, George said, “the major problem we face is that after most events which we render service to we notice that our chairs is not complete while some are even broken.”

    To counter this problem, he said, “we make sure that the celebrant or whoever invited us pays for the damages.”

    When people think of business, there seems to be more emphasis on capital. But there are businesses one can begin without breaking the bank. One of such is the laundry and dry-cleaning business. While you can stretch a budget to run into millions, you could just scrounge with a bucket, water, soap, and ample zeal.

    Well, that is not exactly the story of Oladipupo Abiodun. After working with Adekunle Tunde at Tundex Dry Ceaning, Yaba, in 2009, Abiodun started Divine Laundry. With N70, 000, he bought a washing machine, irons, hangers, Lyons and some chemicals that are used for washing clothes. While he says the laundry business is a profitable business, he also said it is not for a lazy person.

    “Meeting deadline is always challenging,” he said. “You have to hardworking before you can succeed in this business.”

    How does he get around meeting his challenging deadlines? Abiodun, who currently has four employees, replied; “we overcome it by putting more effort and also working hard to meet the day of delivery, which is always stressful because we might have 25 people to deliver to in a day, which we have to work hard to do that. That is why I said this business is not for lazy fellow. This problem can also be stopped if you have enough employees for your business.”

    Among other businesses with small capital to form include that of phone repairs. With a basic, short and inexpensive training, anyone can get started as Chinedu Ike did by starting his phone business with N6, 000. The shoe repair business is also able to be started with little capital as Bode Yusuf found out. He started his business with just N2, 000, which he borrowed from his friend.

    Ifeanyi Uyenne, the Chief Executive/Managing Director of IFYTEX Investment Nigeria, commenced his motor sound systems business with N8, 000 while Mrs. Rashida Owode, a trader who is into buying and selling of goods, started business with N3, 000. Both of them saved for their capital.

    Another business that does not involve much capital to set up is the pulverising of pepper. While many people complain of that most domestic blenders does not ensure a smooth pepper paste for soups, maybe owing to design or lack of access to electrical power. But the petrol-operated pulveriser has long been an alternative to getting smooth pepper paste. It is also business for some people like Rofiat Blogun AKA Iya Kazeem who has been earning money from being a pepper grinder since 2001. She had learnt about the business from her mother who also has a pulverising machine. Iya Kazeem said she started the business with N30, 000 and makes at least N2, 000 monthly.

    She said the time when there are challenges is “when the grinding machine needs to be serviced, because whenever the grinding machine needs to be service it won’t grind the pepper well, and customer complains.”

    Also, the fact that people want to see themselves, friends, places, and events also makes photography a veritable business. To become a photographer, one can start with a basic camera which need not cost more than a few thousand naira, even though modern photography tools can easily run into millions of naira.

    And with N40,000, Yinka Odesanya, proprietor of Yinkus Photography and Studio, began his business in 2005. Before that, for three years, he attended vocational centres and skills acquisition centres. Though, he started with N40, 000, he said people could start with more or less. As for remuneration, Odesanya, who now has two employees and one apprentice said it is good.

    “I earn N10,000 in a month,” he said, “but during Christmas period like this I earn more than N10,000 because of the party event that do take place.”

    And because people need to move around in cars, apart from the mechanic, electricians, panel beaters, and other professionals that make sure that the car is in a top shape, there is a need for the car to remain clean. Hence, the need for the car washers that dot the country. One of them is Ajisope Dauda, who established Ajiyo car-wash in 2008.

    He had earlier worked as a car-washer at Onipanu, Lagos buit decided to open his own car wash after realizing it paid more for the owner.

    “The capital I started with was about N150,000, to dig bore-hole for the purpose of water uses,” he said. “I also bought hose-pipe and other car washing equipment from this capital.

    The return was great and I pray it will always be great.”

    Dauda, who has employees who do the washing, however, complained that the car park where he operates from is small and this is not good for his business. “Whenever customers comes in and they didn’t see where to park,” he said, “they go somewhere else.”

    He also said he had to procure a generator to combat the incessant power outages mitigating his business.

    With food business, you hardly can go wrong. Mrs. Oloye Bisola started her food business in Ladipo, Mushin, Lagos with N5, 000. Though, she said the rigours associated with cooking and selling the food is not easy, she is thankful for the success she has achieved so far.

    And one business that is bound to be with humans for a while will be the business of looking good. This inspired the founder of Atorise barbing salon to set up shop in 2010 after undergoing training for two years. He started the business with N45, 000 and says, with just one employee, he earns N3, 000 every week. To him, that is profitable enough.

    And as the world continues its digital embrace, desktop publishing has become so essential, hence opportunities in that sector. Oscar Babajide, the owner of Blessing of God Graphic Design and Computer Training, opened shop last year. According to him, the capital he invested reached about N150, 000. He said: “I have to buy all the necessary things we needs like a Computer system, Printer, Papers, Films and so on.”

    The 2008 Lagos State University (LASU) graduate also said business is looking bright. “In a month,” he said, “we earn close to N20,000 but if business moves well, we earn more than that.”

    However, the business also comes with its challenges, which Babajide said “is typing-error which makes us lose paper and sometimes customers.”

    Babajide who has two operators and five apprentices therefore advised anyone interested in running this sort of business “must be careful.”

    And knowing that clothing is one of human’s basic needs, the tailoring business is ever booming, more especially as there is a high sense of fashion. Hence such trend influenced Shukurat Oyedapo to establish a sewing shop in 2000 with a capital of N10, 000. “The capital,” she said “was used to buy sewing machines and other sewing equipment, including shop rent.”

    When Oyedapo began the business in 2000, she said her monthly income was about N1, 000 but “presently it is close to N7, 000” though she confides she earns more than around Christmas period.

    wer rungs of the entrepreneur ladder

  • Corruption bane of SMEs in Nigeria, Africa

    Corruption bane of SMEs in Nigeria, Africa

    A new report by the Association of Chartered Certified Accountants (ACCA) may have corroborated experts’ view that bribery and corruption is a major contributor to the demise of 80 per cent of Small and Medium Scale Enterprises (SMEs), within the first five years of their establishment in Nigeria and sub-Saharan Africa.

    77 per cent of accountants in sub-Saharan Africa, surveyed for a global study, believe that bribery is a major concern for businesses in the SMEs sector, and 64 per cent said it had a negative impact on the business environment as a whole.

    Commenting on the report, Toyin Ademola from ACCA Nigeria, said: “While sub-Saharan Africa is a huge place, it is clear that there is a consensus among respondents that bribery and corruption damages a business’s reputation and makes it harder to attract investment.

    The big question for accountants here in Nigeria is: How do we tackle bribery and corruption? The research respondents said the most effective methods would be whistle-blowing laws and more high profile prosecutions.”

    The newly published research from ACCA further stated that more than 60 per cent of respondents did not support the idea that the law should treat bribery and corruption more leniently in the SMEs sector than in the large company or public sectors; but should be tackled across board.

    The report, “Combating Bribery in the SMEs sector” was conducted by ACCA among 1000 of its global members.

    Ademola reiterated: “This report has a clear message for accountants, SMEs and the government here in Nigeria. The full restoration of trust and confidence in the business sector can only be achieved when people believe that business is being conducted fairly and transparently.

    “By adopting a value-based approach, businesses can help themselves and, indirectly, help to achieve the wider goal of enhancing confidence in the business sector as a whole. Accountants, who have twin responsibilities to give best advice to their employers or clients and an obligation to act in the public interest, have a major part to play in this process.”

    The findings reveal a concern that many SMEs are not taking the right steps to mitigate the risks of exposure to bribery and corruption. It also suggests that many businesses have been willing to mis-state financial statements to cover up for bribery and corruption and that recourse to such practices has been exacerbated by the global financial crisis.

    Speaking with a cross-section of entrepreneurs, they shared their experiences as sole proprietors thus far.

    Mr. Sebastian Johnson, who runs Sebastian Electronics Venture, Lagos, who noted that some entrepreneurs may have been compelled to offer bribes to some unscrupulous individuals in an attempt to curry their favours, said it behooves the giver to insist on playing by the rules all the time.

    “Actually, the amount I was asked to pay before I was authorised to sell my electronic products was fair and affordable. But I know some people who have had to pay more for the same. This, I think, can have a drain on their finances if not checked in the future,” he stressed.

    Echoing similar sentiments, Uche Okoro, who runs Uche Pharmacy, Lagos, also recounts his experience. “Before I started my business”, he began, “I went to take permission from the National Agency for Food and Drugs Administration and Control and I was told to pay some amount of money, thus I might not be a victim of those that pay large amount of money before they were authorised. The amount I was asked to pay was moderate and good. But I do know that some others may have been compelled by circumstances beyond their control to part with unreceipted money in the past.”

    Speaking separately with The Nation, Sandra Emerson, also a pharmacist and Oreoluwa Bello, who runs a snack bar in Mushin axis of Lagos, observed that judging by their experience, they have not fell victim of bribery, especially from authorising agents.

    Said: Emerson: “As far as I know, I don’t think there is any form of corruption within the agency because the amount I paid before I start selling was okay. But that is not to say that people have not been coerced by some officials of some of these agencies to offer one form of gratification or the other. You cannot put it past them.”

    In her own assertion, she said: “The amount we paid here was okay, and I don’t think there is any form of corruption among the agency.”

  • MY SME STORY: ‘You need perseverance to succeed as an SME’

    MY SME STORY: ‘You need perseverance to succeed as an SME’

    Mr. Oseni Abayomi, a graduate of Banking and Finance from University of Ado-Ekiti, (UNAD), Ekiti State, sits atop Xpress Max Dry Cleaning Services as Managing Director/Chief Executive, which he set up in 2011. In this interview with Tolulope Ogidan, he shares his experience on running a fledging business

    That is your antecedence in business?

    I was working as a branch manager with Assluence Consulting, a one-man business. But then I’m the kind of person that loves looking good and then pressing of clothes is my hobbies. When I was no longer finding fulfillment in what I was doing, I resigned. That was 2011. When I resigned, the money I was able to gather, that was how I was able to sketch up my own personal business. I started from my parent’s place along Iyana-Iba axis of Lagos, that’s supposed to be the head office. I brought a washing machine, and started meeting one or two contacts, people that I know. I started the washing myself, I wash, put in the machine, I iron, I distribute, send text, later I started sending bulk sms, when I realised that I could not deliver, because I hate disappointing clients, I started bringing one or two people in like of staff.

    How much capital did you start with?

    I started with nothing less than N50, 000. But some start with 100, 200, it depends on what you have.

    What has your experience been running the business?

    It’s been wonderful. It’s a very good business and a very lucrative business, if somebody will actually want to go into it, it’s a business that is very profitable, but the only challenges is manpower, and the challenges is man power, because typical Nigerian guys are not ready to do that kind of job because, it’s not an easy task, for you to iron 20-30 pieces of clothes, so why doing that, you know it requires manpower, by so doing they usually back off, they usually back off from such act. So we have challenges with manpower, so we have no choice than to go to Cotonu to get some people to work for us.

    How many employees do you have now?

    Presently, I have about five staff.

    What are the challenges you faced when you started?

    The challenges I faced was just that when people place orders on phone, because I do it via mobile, they send me text, please come and pick my clothes, at that point am ironing, am ironing I need to pick clothes from two, three places, those were the challenges I was having, and then when I need to get some clothes, wash it at the same time, and iron it, at times I do night, because I was the only one, so I had a lot of challenges when it comes to picking and delivering.

    What’s the peculiar problem that you faced running the business?

    The most peculiar problem is when you disappoint client, I need to wear my clothe to church tomorrow and such person do not get it, that’s one, two if somebody gives you a white cloth and the person happens to discover that the white happens to be of cream, it’s another challenges, because we use chemical and all those things, are things you need to be familiar with, and you should know their names, because there are some kind of chemicals, that should not be applied on black, and there are some that should be applied, so those things are key things that somebody that ones to go into dry cleaning business ought to have study, if not there are some tools that are very expensive, if you mistakenly collide it with the ones that bring out stains, it can really destroy the cloths of such a client, and he/ she will not take it likely with you. Some client will tell you that go and buy me another one, or some will say I not going to give you clothe again. those are the things you need to do, if you want to wash you separate them, study it, the ones you need to apply chemicals or not.

    How did you overcome the teething problem of the business?

    You know when you make mistake once, and then I as a person am an intelligent person, and I don’t joke with my job, so I won’t allow anybody to rubbish me, I was able to manage those challenges because I don’t want my name to be rubbished, before I put any cloths in to the machine, I use to do the real laundering, the real laundering is when you use your hand, so I take my time to know if such a clothe will be able to absorb chemical or not, so that was how I was able to overcome it, but there is no how you must make mistake, because when you make mistake you will be able to correct such mistake next time.

    So how much is required to set up a business like yours?

    It depends on the kind of the one you want to go into. It depends, you can set up the business with just N50, 000 when you have you house, all you just have to do is to get a washing machine and that’s all, and you get a very sound steaming iron, because there are some that cannot iron all kind of fabric, and there are some that when you put it on a particular kind of fabric for the next ten hours, it will not get burnt, it automatically regulate, and there are some that are expensive as N15,000, there are some of twenty thousand, and there are some of N7,000, it depends on the range, with N50,000 you can set up the business.

    Do you have any plans of expanding the business?

    Obviously, I have the plans of expanding the business, because it’s a business that does not really attract much space, and it’s very profitable. Even outside Nigeria, yes, because people hardly have time in Nigeria as a whole, you go to work early in the morning, you come back late, your Saturdays you go to party, Sundays you go to church, they hardly have time to do laundry, and most of their expensive cloths they prefer to take it to dry cleaner, so that such materials can last longer.

  • Heritage Bank identifies hurdles to SMEs growth

    Heritage Bank identifies hurdles to SMEs growth

    The Chief Executive Officer, Heritage Bank Plc, Ifie Sekibo, has advised Small and Medium Scale Enterprises to focus more on restructuring and innovation in order to access the unfolding opportunities for growth and development in the economic landscape.

    Sekibo noted that SMEs were a vital national economic growth engine, contributing to economic indicators like employment generation and Gross Domestic Product with about 70 per cent of the rural population being active in the formal and informal SME sectors.

    He, however, pointed out that growth possibilities were being hampered seriously, as a low number of start-ups that apply for medium-longer-term financing were actually succeeding.

    He attributed the main challenge facing SME promoters in the country to limited access to appropriate capacity building opportunities and education which, in turn, lead to other growth-limiting impediments such as inadequate financial record keeping, poor managerial skills, lack of access to international markets, inability to provide collateral and poor access to infrastructure.

    According to the CEO, for the country to achieve the laudable dream of the Vision 2020, the national technical working group on SMEs and all stakeholders in the SME sector must join hands to create and sustain an active SME sector through the establishment of a solid framework supported by a clearly articulated government policy.

    He said, “SMEs enhance competition and entrepreneurship, and their proper development has a positive impact on innovation and productivity growth. Developing the SME sector, therefore, requires a concerted effort from all stakeholders.”

     

  • SME Funds promises to boost renewable technologies

    SME Funds promises to boost renewable technologies

    SME Funds promises to boost renewable technologies. SME Funds, a group committed to alternative energy developmen,t has concluded plans to deliver clean cooking and renewable energy technologies to over 10 million households in Nigeria and other parts of West Africa.

    This is targeted at solving problems that many households encounter in meeting their domestic cooking needs in the region.

    The SMEFunds Cofounder and CEO, Mr. Femi Oye, who confirmed the development, stated, “People are hungry for good alternatives to kerosene and other unsafe, dirty cooking fuels.”

    He said, “We started with the simple belief that cooking shouldn’t kill. Why should our women cook with tears?”

    Oye also said, “Africa – SMEFunds ‘Green Energy & Biofuels’ (Nigeria) has been named the best clean energy investment opportunity in West Africa and overall Winner at the West Africa Forum for Clean Energy Financing (WAFCEF) Business Plan competition in Accra.

    He said the competition assessed business plans from all clean energy sectors across West Africa in two elimination rounds.

    The final round brought the top 10 companies among the 72 applications received to Accra where they were judged by representatives from major international organizations such as Leo Blyth (IFC, Lighting Africa Initiative), Musa Salah (EcoBank), Godfrey Mwindaare (Acumen Fund West Africa), Professor Joseph Adelegan (EBID), and Sander Smits van Oyen (SOVEC).

    Green Energy & Biofuels stood out due to the established track record of SMEFunds, innovative technology and the ability to scale quickly.

    The $28million Investment in the first round will go towards scaling up their renewable ethanol cooking gel production and clean cookstove manufacturing.

    Already, over 1 million liters of cooking gel has been produced locally using 2G Cellulosic Bio-Ethanol technology from wastes such as water-hyacinth and saw-dust from Lagos saw mills.

    SMEFunds has already recruited over 15,000 entrepreneurs through its Carbon Credit Network and helped them start green businesses that sell the cooking gel and stoves across Nigeria and West Africa.

    More youth and women stand ready to bring safer, stable green energy to their communities once the scale-up is reached.

    The Climate Technology Initiative Private Financing Advisory Network (CTI PFAN), the ECOWAS Regional Centre for Renewable Energy and Energy Efficiency (ECREEE), and the Regional Clean Energy Investment Initiative (RCEII) of the U.S. Agency for International Development (USAID) and SEFA supported the competition.

    The business plan was assessed thoroughly after benefitting from a six month program which provided development and structuring, the preparation of bankable business plans and investor pitches from professional advisors, clean energy investors and commercial banks.

     

  • N200bn SME fund: NDIC urges states, councils to float microfinance firms

    N200bn SME fund: NDIC urges states, councils to float microfinance firms

    The Managing Director and Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim has urged states and local governments in the country to float microfinance institutions in order to access the N200 billion Medium, Small and Micro Enterprises Development Fund (MSMEDF).

    Speaking at the closing ceremony of the 2013 workshop for financial correspondents in Uyo, Akwa Ibom State, Ibrahim explained that the fund for MSMEDF would not be effective in states with large rural areas and few microfinance banks unless there are banks to support the existing ones.

    “We continue to call on the local governments, the state governments to float and nurture sustainable MFBs in their areas so as to help the poor in their areas to have access to savings and to credit without which our strive for financial inclusion and poverty eradication will not be realized. Those states that obviously don’t have enough MFBs cannot easily access that N220 billion.

    “For instance, in Jigawa even as at today, there are less than five functional MFBs even though there is a brand new airport there. The Central Bank of Nigeria (CBN) has realized that it is important for state and local governments to be given the opportunity to float and nurture MFBs.

    “This is a new policy that has been agreed upon by the CBN and it is in the realization that MFBs cannot be left in the hands of Deposit Money Banks (DMBs) because the creation and sustenance of MFBs is a very serious developmental issue and the UNDP and some other developmental organizations have amply demonstrated that,” he said.

    He further said there is a direct link between the depositors and financial inclusion.

    “As you know we charge far less premium for MFBs. They pay far less and as we speak for the last couple of years, a lot of them have not been able to pay the premium they are supposed to and yet we have not closed them down for that and have not ceased to insure them.

    “This is because we feel they have to be encouraged and as a matter fact, the 103 MFBs that were liquidated two to three years ago a lot of them did not have enough money for us to pay their depositors and we had to resort into topping up from the premium we collected from the other banks”, he said.

     

  • Firm develops solution to grow SMEs via social media

    Cornerstone Limited has unveiled a software called Victory 100 that the firm said allows small and medium scale enterprises (SMEs) to use social media platform to enhance growth and business expansion.

    Chief Executive Officer of the company, Rev. Lawrence Awolade, who unveiled the software in Lagos over the weekend described it as a seamless digital marketing social media business system that allows the user to post and manage all their social media from one site.

    According to him, it could take hours every day to post on the variety of major social media sites available and more time to manage them, answering questions and trying to get them to buy your product, adding that the cost and time spent on finding a way to capture the names and emails of interested people, building a relationship with them through emails and newsletters and contacting them with personalised specials and time sensitive offers can be overwhelming.

    “We harness the power of social media, take the mystery out of social media marketing, delivering an easy to use automated system that even beginners can understand and use. Manage your social media across multiple platforms, monitor brand mentions, and quickly publish content within a single dashboard,” he said, adding that the email platform built into Victory100 allowed the user sent personalized emails to all prospects when there was something special to promote or an announcement of new products or services at a cost of $25 per month.

  • How to access SME funds

    How to access SME funds

    Bukola Afolabi in this report shares useful tips on how small and medium scale entrepreneurs can access some of the intervention funds earmarked for the sector by the Federal Government through some of the quasi-governmental agencies like the Bank of Industry (BoI) and others

    According to a recent survey conducted by the National Bureau of Statistics and SMEDAN, the SME sector currently represents 97 per cent of the enterprises in Nigeria and employs over 32million Nigerians.
    But, it is, however, instructive to note that one of the major challenges that have limited the access of small and medium scale enterprises to credit facilities is their inability to present bankable proposals to financial institutions.
    Echoing similar sentiments, Ms. Evelyn Oputu, Managing Director of Bank of Industry (BoI), said the difficulties most SMEs face in their quest to secure funding for their businesses, is as a result of their inability to supply the right information required by banks to process their loans application.
    Having recognised this, the BoI has continued to organise series of capacity building programmes to empower owners of small businesses across the country.
    Thankfully, BoI under its paradigm shift launched in 2006 has continued to dedicate 85% of its resources to funding of the SME sector.
    In order to address the problem of lack of access to finance for the development of the sector, the federal government, through the BoI, has developed a counterpart funding scheme and currently has a partnership with 17 states, with more in the pipeline for next year.
    This scheme has generated a funding pool of approximately N9billion for MSME development.
    This new scheme being spearheaded by the Federal Ministry of Industry, Trade and Investment (MITI) is aimed at harnessing the vast opportunities in the MSME sector to drive inclusive economic growth through skills acquisition, entrepreneurship training, business financing, employment generation as well as wealth creation. And in order to harmonise all SME development activities across the country and achieve maximum impact, the Federal Ministry of Industry, Trade and Investment is promoting the establishment of SME council in all the 36 states and the Federal Capital Territory, Abuja.
    The SME council are structured to comprise relevant state government official, those of the organised private sector and representatives of SME promotion, development and facilitation agencies.
    ABC of accessing BoI funds
    BoI fund items like manufacturing, agricultural and so on. To access the Bank’s facilities, prospective applicants are required to take one of many steps.
    Among other things, an applicant is expected to submit a proposal by writing a formal application letter, completion of BoI’s questionnaire.
    Besides, applicant must produce a photocopy of Certificate of Incorporation, Certified True Copy of Memorandum and Articles of Association, form CAC 2.5(CO2) and forum CAC 2.3(CO7) of the company.
    Prospective applicants are equally required to provide the most recently audited accounts in the case of existing businesses in the last three years and a report of feasibility study, land and building documents with an unexpired tenure of 25 years minimum, statutory Certificate of Occupancy original copy for sighting, approved building plan, bill of quantities or contractors estimate\valuation report on building as applicable as well as a satisfactory tenancy agreement long enough to cover the tenure of BOI’s facility, in respect of suitable rented property.
    Other requirements include providing a proforma invoice for items of machinery and equipment from the source indicated in the feasibility report; enumerate price and source of raw materials, present a tax clearance certificate of the company along with names of at least two directors for the last three years, with eight recent passport photographs, international passport or driver’s license of each and that of the company secretary.
    In an interview with The Nation, a highly placed source at the BoI, who would not be named, said, “You can simply walk into any of our offices in Lagos, Abuja and the six geo-political zones across the country to access our loans. You don’t have to know anybody at BoI to enjoy our services.”
    Besides, BoI, there is also the Micro, Small and Medium Enterprises Development Fund (MSMEDF) which has been earmarked a proposed seed fund of N220billion, with a minimum of 60% (N132billion) of the Fund committed to providing financial services to women in order to address their peculiar financial exclusion challenges.
    Guidelines for accessing MSMEDF
    This guideline specifically sets out the modalities for operating the N132billion women component of the MSMEDF.
    The Fund’s two main objectives namely: social/developmental objectives/grants.
    10 % of the MSMEDF has been earmarked for administrative objectives in the following categories: Managing Agent’s Operational Activities of three percent (N3.96b) and Interest Drawback Programme of two percent (N2.64b).
    Details of the application of the grants
    A component that includes capacity building of staff of microfinance institutions (MFBs, MFIs and similar institutions) and their apex bodies on women-based lending has been built into the fund.
    Besides, microenterprises which have a mandate to manage 80% of the commercial component of the Fund have N95.04 billion while SMEs are expected to manage the remaining 20% of N23.76billion.
    Activities for which the PFIs can seek for facilities from the Fund shall include those for agricultural value chain activities, trade, cottage industries, artisans, services including: hotels, schools, restaurants, laundry etc and any other income generating projects as may be prescribed by the Managing Agent.
    The Fund shall be managed by a Special Purpose Vehicle (SPV) under the terms and conditions defined in the general guidelines for the MSMEDF. In addition the Department of the Fund that shall administer the Women component of the MSMEDF shall be headed by a woman.
    Requirements for Microfinance Banks/Finance Companies
    For a microfinance bank/finance company to be eligible for support from the Fund, it is expected to satisfy the following conditions as obtained from its latest CBN examination report:
    • Compliance with regulatory capital
    • Compliance with prevailing prudential ratios: liquidity 20%; capital adequacy ratio 10%; adjusted capital to net credit ratio; micro credit to other loans ratio; and 80:20.
    • Average deposit growth rate of 20 % per annum
    • Favourable profit trend for three years.
    • Risk management framework acceptable to the regulators
    • Corporate governance culture acceptable to the regulators and as indicated by number of non-performing insider-related facilities; degree of separation of ownership from control/management; adherence to sound ethical values.

  • Etisalat partners EDC on global entrepreneurship week

    Etisalat partners EDC on global entrepreneurship week

    Etisalat Nigeria in partnership with the Enterprise Development Centre (EDC) of the Pan Atlantic University, recently held the 2013 edition of the Global Entrepreneurship Week (GEW), targeted at youths and young entrepreneurs in the country, to help improve their chances of succeeding in their various chosen businesses.

    Head, Business Segment, Etisalat Nigeria, Mr. Bidemi Ladipo, noted that it was important for business owners to have access to the right information needed to excel in business.

    “At Etisalat, we have been relentless in supporting initiatives that go a long way in assisting young people to achieve their dreams as regards successfully setting up businesses. Some of the initiatives we have used to help develop businesses include Market Access which is in partnership with SMEDAN, our Etisalat Easybusiness package which helps SMEs to communicate at a reduced cost and our recently launched promo called Easybusiness millionaire hunt which gives an opportunity for people with great business ideas to win as much as N2 million. This is the 3rd Edition of the Global Entrepreneurship week which we are sponsoring and we are satisfied with the level of impact these trainings have had,” he said.

    Also speaking at a seminar earlier organised for National Youth Corpers, Deputy Director, Enterprise Development Centre, (EDC), Nneka Okekearu expressed satisfaction with the improved turnout at the seminar.

    “It has become very obvious that our contributions to the Global Entrepreneurship are beginning to pay off. In the last three years since Nigeria joined the international event, we have had over eight events, over 50 local partners and more than 1.5 million people have participated at the events held in Lagos and Calabar,” she said.

    She also commended Etisalat Nigeria for once again partnering with the Enterprise Development Centre for this year’s edition.

    “I want to particularly thank Etisalat for the support they have shown to EDC in making this edition of the GEW another success. They have been with us over the years and have continued to demonstrate strong support towards young entrepreneurs,” she said.

  • MY SME STORY: ‘I’ve never enjoyed support from banks’

    MY SME STORY: ‘I’ve never enjoyed support from banks’

    Funsho Okunnwo, Chief Executive Officer, Royal Priesthood Laboratory, is a small and medium scale entrepreneur who has conquered his terrain. In this interview with Bukola Afolabi, the 56 years old pharmacist and graduate of the University of Lagos shares his experience in running an enterprise vis-à-vis challenges and prospects

    Can you tell us exactly what your business is all about?

    I am a pharmacist and I run a pharmaceutical company Royal Safety Laboratory to the class of product and drugs which we call antiseptic disinfectant. These are products that are used to eliminate or kill germs, everywhere like industries, hospital. Some of them are used in theater before the surgery why some are used in the wards, some for patient.

    How much capital did you use to set up shop?

    In 1992 I started with a capital of N100, 000 and I have been turning the money over. Like every small business at that time it was a tough beginning but I got inspiration from the people who encouraged me to start.

    How many employees do you have now?

    Currently, I have about 18 staff.

    Where did you start your business from?

    I started from Ogba Lagos. I rented a three bedroom bungalow in Oke-Ira, Ogba, and that was where I started with just one car, the number continued to increase over the years, but later we had to relocate to Ikorodu due to accommodation problem.

    How much is the business worth now?

    Well I can’t say precisely but I know that we are not less than N2million, if not more.

    How easy was it for you to get the capital then?

    The capital that I started with was gotten through savings from my earning, because I used to work with some companies before I resigned to start Royal Priesthood Laboratory. While I was in the service there was usually one thing or the other that I did to survive. For example, where I have my current office was used for my piggery business. Then I put things together and I was able to raise the starting capital.

    How is your relationship with banks?

    My sincere opinion is that Nigerian banks are not in any way supportive. They have not in any way supported me or Royal Priesthood, I doubt if they are supporting SME’s. For example, I can recall two situations to buttress my point. In the first, I was asking to supply some goods in Lagos sometimes ago and I needed about N600, 000 in the year 2000 but I couldn’t raise the money. I approached the bank but I didn’t have the collateral they were asking for and eventually they didn’t give me. I had to go borrowing from friends and others. Then there was another occasion that I needed to import raw materials and it was going to cost about N500, 000 and I had about N350, 000. So I asked the banks to just give me about N150, 000 to make up the difference, but they did not respond, eventually I had to look for another alternative. So to me even up till today I don’t believe they mean what they say. Interestingly, they are now running after us to come and open account and borrow money; I told them that they want what the Yoruba’s call Ako eyin adiye je ti o mo pe idi ro adiye. (One who eats up a fowl’s eggs voraciously but doesn’t know what it takes to lay eggs.)

    Can you tell us your challenges during these periods?

    On the challenges, there were many. From the start I had accommodation problem because shortly after we started, in less than two years the landlord ejected us from where we started from. We then needed a place that would be acceptable to the regulatory agent, the NAFDAC and Pharmaceutical Council of Nigeria. This must be a self-contained apartment that we will be the only one in the compound, and that sort of accommodation was not so easy to get for rent.

    So, for about a period of one and half years I was looking for another place after we were ejected from the old place because my nature is not to make trouble with anyone. When the landlord ejected us, we just left the place.

    I did not question or query him before we got another accommodation in Ikorodu another rented apartment but by the grace of God we are now operating the business in our own accommodation now. Part of my initial challenge therefore was capital and this would always be there. There was also the challenge of acceptability and when we started many of the hospitals then were skeptical of the quality of the products. Luckily for us, the quality was good and the glory of God today many of them are no longer skeptical about us. Another challenge we were faced with was meeting the requirement of the regulatory body. Many times they came complaining that it was not up to standard in terms of this and that.

    I will say to a large extent that it is a positive challenge and it helped us to continue improving standard. Today, even if they are coming not that they won’t have one thing or the other to say, and we are confident that for any fair or reasonable person everything is in place.

    If you want to advice somebody who wants to start a business, what are the three most important things?

    The first thing I will tell the person is that Leoshe should not look at the capital irrespective of how high the capital may be. Don’t look at the capital, start with whatever you have and then start improving on it. This way you will cut some expenses and save more. Many people actually spend on those things that are not so important and when you have a big project before you, then you would be forced to save towards it. The second thing I will say is the place of honesty in your business because it goes a long way to create credibility for your brand. Today, it’s unfortunate that a lot of people are not honest and they want to cut corners and compromise, especially in terms of the products standards. It is very important to be very honest with your customers, because with time they will get to know you for that and this in itself will be a selling point for you.

    What are the most important mistakes they must avoid?

    I would say that one should never think that without a big capital they cannot start. Interestingly, that is the mistake that many people make and most times they would say I don’t have money or I cannot start. It is sad to note that a lot of Nigerians are not honest when it comes to business; I think that’s a mistake on our part. In addition to all this, it is important to feel free to talk to people about your needs ,there are doors that can be opened to you, just because you opened up to someone.

    What are the prospects SMEs in Nigeria with banks and government policy?

    Well, the government policy I will say it is just in the papers. Government in my mind are not making enough effort to implement the policy and then the banks are ready to give loans to those who will only give them some quick turnover. These would be people who will just go and collect contract papers and terms of collateral are not within the reach of many SME’s. Usually what you find are situations where SMEs have to provide their own capital, electricity, water, to mention just a few.

    Recently the federal government said they have spent N7billion on SME’s through Bank of Industry including N9billion for SME’s, how directly or indirectly are SME’s really benefiting from it?

    I believe that some of the SME’s are accessing the funds. But on my own part the times I needed such money has passed. I have resorted to just doing things my own little way, I don’t think I need them so much because the type of fund they are saying they want to give. I don’t believe that those kind of capital are beyond my reach , so I can generate it within, why do I go out to get it? I am not saying that we are there yet but I will rather want a situation we grow gradually not fast like some people do because that its own problem.