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MSME

Five fastest growing small scale businesses in Nigeria

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A few years ago and these businesses probably wouldn’t be ‘socially adequate’ but today, they seem to have taken the center stage when it comes to footing the bills. These businesses have today become the fastest growing businesses to own in the country.

There are a lot of business ideas in Nigeria than you could imagine; the only restraint is people’s concern with regard to the life span of these businesses. Here now are five fastest small businesses that are rapidly taking over the Nigerian market. Don’t be scared, they are small scale businesses that require a little start-off dough but in no time, rakes in big bucks

Restaurant

Food is one commodity that is always in the market regardless of economy and market conditions. Going into restaurant business in Nigeria today would be a smart move business wise. You could brush up on your kitchen skills for a more successful venture if you feel that your cooking is average or lower. On the other hand if you are confident of your cooking skills, make plans, get the necessary documents and set up shop.

Bakery

Snacks and confectioneries also never go out of ‘fashion’ in the market. Celebrations are always around the corner placing the demand for cake and other baked foods very high. The baking industry is one of the fastest growing ones in Nigeria today. You could start small and in no time grow bigger than your expectations. A lot of baking and catering schools are available over the country where you could register for a few months course to get started.

Web/graphic design

Graphic design is growing fast; you should join the train right now! The future prospects of this line of business are great considering the incline of the country towards technology. The exciting thing about it is that you can get an ‘on-the-job-training’ online. It requires little to zero capital but depends highly on networking.

Gym/fitness center

The desire for a great figure is becoming more and more evident in the Nigerian population today. It was usually more so for the ladies but even the men are consciously making efforts to tone their muscles. This business might require more in the finance department than other small scale businesses but produces as much with regards profit. It is imperative in this line of business that you get some sort of training because you cant impart knowledge in someone that you don’t possess.

Bar/wine shop

Whether retail or wholesale, drinks are quite ahead in the most demanded goods list in Nigeria. Almost every evening (if not all), people are hanging out with friends to take a drink or more. Going into sales of wine/beer is one business that is not about to go extinct just yet. In fact, the demand for them seems to always be on the rise. This is a promising small scale business idea. If you aren’t exactly a connoisseur, you could simply seek advice form someone already in that line of business. The most important part of this business is location. Ensure that you are located in an area that is best for it.

The most important thing is to ensure that you have the right documents to set up these businesses, the right location and that you are best equipped for the job. If there is need to employ other hands, do not hesitate.

Chacha Wabara-Ogbobine is a Legal practitioner with over 9years post call experience. A research Consultant, professional writer and a blogger at heart,owner of four thriving websites with well over 10years of experience.Totally in love with keeping fit and coaching weight loss enthusiasts. I love my quiet time, being with my kids, watching TV series for hours on end.

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Columnists

How MSMEs can get easy access to finance

MSMEs must take the following steps for loan readiness.

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How MSMEs Can Get Easy Access to Finance

MSMEs are considered the backbone of the Nigerian economy. In 2019, they made up 90% of all registered businesses, contributed more than 50% of the country’s nominal GDP, and employ 84% of its labour force. Despite this, MSMEs were the recipients of less than 5% of all credit granted by the banking industry.

One reason for this is self-selection by MSME owners. Many MSMEs refuse to apply for loans from banks due to a fear of rejection and a belief that banks charge exorbitant fees and request hefty collateral before giving loans to MSMEs. Now more than ever, in this era of cashflow-based lending and low-interest rates, this harmful myth is costing businesses access to finance that they need to scale.

Another reason is the MSMEs’ lack of loan readiness. Unlike large companies, small business owners do not prepare themselves before applying for loans. This causes them to make many mistakes that discourage banks from lending to them due to a fear of non-repayment.

In order to overcome this hurdle and join large businesses in taking advantage of the low-interest climate, MSMEs must take the following steps for loan readiness:

1. Maintain financial records – Research shows that 69% of MSMEs in Nigeria do not keep detailed financial records. As a business owner, you must ensure that funds pass through your business account. Your business’s financial records as reflected in your bank statement will help your bank determine your repayment capacity. This is important, whether you want a collateral-free or collateral-based loan.

2. Use narrations for transfer into personal accounts – Again, always use your business account for business funds. However, if funds must be paid into your personal account for any reason, then ensure that those payments have a narration that reflects the purpose of the payment. For example, Two shirts purchased. This helps isolate business funds from personal when computing your turnover in order to determine your loan amount and repayment capacity.

3. Know what you want – Always know exactly how much you want and what you want it for. If your account officer asks you how much you want and you say “any amount you can give me”, they automatically assume you have no plan for the money or a plan for repayment. Before approaching your bank, determine how much you need and how much you can repay per month, using your monthly income.

4. Have a repayment plan – Always have a plan for repayment. Know how much you can afford to part with per month. Note however that your repayment plan might not align with that of the bank. Banks prefer not to take more than 33% of your monthly income in loan repayments, so your loan repayment period will probably be dependent on how much you can pay per month. Regardless, a well-thought-out repayment plan will build confidence in your repayment ability.

5. Engage your account officer– It is important to have an engagement with your account officer before applying for the loan. Instead of just writing a loan application letter to the bank and waiting for a response. Armed with your financial statement and your knowledge of how much you need and for how long, visit your account officer and have them work with you in getting your loan.


Ese Atakpu is a writer and banker.

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Commodities

AFEX raises $50 million to Finance Agri-SMEs in Nigeria

The $50 million Agri-SMEs fund is expected to bridge the funding gap between lenders and borrowers in the agric sector.

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AFEX to partner with FMDQ and Dubai Commodities Exchange, 50,000 farmers to benefit from AFEX Commodities agric funding initiative

AFEX Commodities Exchange Limited (AFEX), a private commodities exchange company, has announced the first Warehouse Receipt Backed Commercial Paper in Africa. The paper has tech-enabled operations and a 24-hour fast cash turnaround for borrowers.

This was disclosed by AFEX in a statement issued and seen by Nairametrics on Thursday.

The $50 million Agri-SMEs fund is expected to bridge the funding gap between lenders and borrowers in the Nigerian agricultural sector with a commodity-backed instrument – for the first time.

READ: AFEX partners FMDQ, Dubai Commodities Exchange to deepen markets opportunities

Ayodeji Balogun, CEO, AFEX, stated, “The AFEX financing deal will help eradicate the high cost of procurement incurred by processors by deploying a discounted value of a warehouse receipt distributed among five leading players in the Food and Beverage, Trading Poultry and Animal Feed segments in Nigeria.

“The receiving companies are top 10 players in their respective segments. They have now been enabled access to a tool for managing price volatility, enabling up to 30% direct savings on prices.

“With our vision to reach a cumulative total of over $5 Billion in investment to the agriculture sector over the next five years, this financing deal is right on track to achieve this goal.’’

He added that as AFEX move towards building a derivatives market in Africa, “we want to be able to reduce exposure to price risk for stakeholders, by enabling them to hedge their positions and trade in commodity derivatives.”

READ: CBN to increase loans to agricultural sector to 10% of total bank credit

Why it matters

  • The warehouse receipts, which can then be transferred from commodities to a financial asset and listed under the borrower’s portfolio on the AFEX trading platform, will create a sustainable funding structure and address underfunding in the Nigerian agricultural sector.
  • With the warehouse receipt system linked to financiers, the system allows financiers value and marks the commodities’ price to market on a real-time basis.

What you should know

  • AFEX’s mission is to provide low-risk working capital facility for stakeholders in the Agro sector, in a way that is transparent and has a very high viable investment return.
  • As a licensed commodities exchange and warehouse receipt system operator, it deploys a warehouse receipt system and collateral management infrastructure to increase market confidence for both lenders and borrower.

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