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Why the difference between an Investor or a Lender can Determine how You Get your Money Back

Here is why your place (whether as a lender or an investor) in a business determines how you get your money back. #finance #entrepreneurship #capital #business




Frank decided to accept a business proposition from his friend Chike after weeks of pitching from the latter. Chike was an experienced trader and had been successful in making money for Frank in previous deals they had done. Frank gave Chike a sum of N5million for the business with a promise to get a profit of N2million at the end of the 12 months.

It’s two years now and Frank has only been paid N500,000 from the N5million given to Chike, far short from the N4million (interest only) he should have received based on the promise of a 40% return. Having exhausted his patience, Frank requested for his capital of N5million which Chike apparently has unfortunately been unable to provide as well.


Their relationship has gone south since this deal failed to materialised as planned, and every avenue of reaching a financial truce has been exhausted. Frank is unrelenting and has demanded that Chike give him back his money and nothing less.

When a business didn't yieldA commonplace scenario

Stories like this are not uncommon in Nigeria and in fact do happen everyday between people who you think should know better. Feuds like this can be avoided if only people knew the implication of parting away with their money unwittingly. An investment in a business is akin to putting equity into a company.

For example, If I am approached by someone to invest in a business and I ended up parting with some money in return for profit, then that money I parted with is more like an equity investment. As we mostly know Equity Investments are only secured by your shareholding in a company even if you weren’t offered shares.

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[Also Read: 10 Mistakes to avoid for Start-Ups]

Investor vs Lender

Though, it can be argued that since I did not receive shares my money should be seen as a loan. I will therefore like to use the story of Frank and Chike to properly highlight the difference between an investor and a lender.

Difference between lender and investor

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Case study 1:

If the money given to Chike by Frank was a loan and not represented by shares nor any collateral;

In this case the amount given to Chike is an unsecured loan and can only be paid by Chike depending on his financial ability. Usually, the Police settle cases like this out of court by asking the debtor to decide how much he can pay periodically. So if Chike says he can pay N1,000 every month till he finishes then that is it.

If Frank doesn’t accept then he can proceed to the courts which might take forever to decide. This scenario can be proven as a loan even if the agreement did not specifically refer to it as neither a loan or an investment. However, Frank may never get back any interest.

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However, if the agreement was worded in such a way to suggest that Frank gave the money to Chike based on a partnership or collaboration then it is an investment and Frank may just immediately consider that money a bad debt which is likely lost.


Asset backed loan


Case study 2:

If the Money Chike received from Frank was secured by an asset;

If this is the case then that specific asset or assets will be sold to recover the money that will be paid back to Frank. The problem, however, is that the money may not be enough to which case the Judge or whoever is handling the case may ask that another asset be provided.


A bigger problem even is that if the asset(s) is already registered by the state in favour of another person or persons (creditors) Chike is owing, then consider that the person(s) will have to be paid first before Frank receives his money. Regardless of the above, I still consider the debt in this scenario an unsecured one especially if the asset(s) is not registered. This scenario is, however, Lending in my view.


Case study 3:

If the money was given to Chike in exchange for shares;

This is purely an investment and as such the money Frank gave Chike is his equity contribution to the business. His recourse to his money will probably be a sale of any remaining assets the company may have. If there is none, then he may just consider his investment lost for ever. Chike is not obliged to pay Frank any money back.

Find Out: How to interview the person hiring you]

Understanding investment

  • Who is an investor?
  • What does an investor stand to gain?
  • What is the downside of being an investor?
  • How shares works in investments
  • Manners of recovering funds by an investor

If an investor typically parts away with his money in the form of equity in a business; in return -he gets to be an owner of a business, receives dividends from the profits declared by the company, receives value appreciation in his investment if he decides to sell his shares at a higher value etc.

An investor cannot expect to get interest payments or refund of his capital in a business. He can only get refund of his capital by either selling his shares or if the company decides to go into voluntary liquidation and shut down.

Who is a lender?

The Lender’s Equation

A lender, however, expects to get back his capital along with interest as specified in the contract. However, the degree to which a lender is able to recover their money in the case of default by the borrower will depend on how strong the collateral or security he posses against the borrower’s assets.

The Lender is even in a more precarious situation if they have no collateral or security. In this instance they may never recover their debt should the borrower remain unable to pay.

[See: 10 Mistakes to avoid for Start-Ups]

Updated on July 15, 2019: This story was published at an earlier date and has been revamped to educate our readers on the subject.


Ugo Obi-chukwu "Ugodre" is a chartered accountant with over 16 years experience in financial management, corporate finance and financial analysis. He is also a retail investor and a personal finance advocate with over a decade experience investing in the Nigerian stock market. Ugo is the founder/Publisher of Nairametrics and blogs regularly on the website.

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DisCos seek CBN funding for massive roll-out of meters to consumers

This, it was said will help DisCos meet the 2024 deadline which they had committed to.



NERC, electricity tariffs, hotels, bars,

A Central Bank-funded massive roll-out of meters would expedite the efforts to achieve the full take-off of the proposed Service Reflective Tariff (SRT), Electricity distribution companies (Discos) have suggested.

According to Mr Sunday Oduntan, the Executive Director in charge of research and advocacy at the Association of Nigerian Electricity Distributors (ANED), such funding would help ensure that all electricity customers are adequately metered under the Meter Asset Provider (MAP) regulation.


Oduntan, who said this in a statement to NAN on Friday, also disclosed that it would assist the distribution companies to meet the 2024 deadline which they had committed to, for metering all electricity consumers.

He recalled that Mr Ernest Mupwaya, Managing Director of Abuja Electricity Distribution Company (AEDC), had spoken on behalf of the DisCos at the House of Representatives Public Hearing on the power sector on Thursday.

According to Mupwaya, the Capital Expenditure (CAPEX) provision in Nigeria’s electricity tariff was insufficient to cover the cost of metering customers.

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“Over the years, there has been insufficient investment in customer metering, due to inadequate Multi Tariff Order (MYTO) CAPEX and uneconomic tariff. The approved CAPEX for DisCos has never been adequate for comprehensive metering,” he said.

He added that the Discos were requesting CBN to provide funds for emergency mass metering projects since they no longer had a provision in their CAPEX for metering. If approved, the project would be completed within a period of 18 months.

Mupwaya added that the funding was even more necessary since no provisions had been made for metering in the event that the MAP regulation failed.

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The first quarter of 2020 had seen an average monthly growth of 75,000 new customers every month, moving the number of metered customers in Nigeria above 10 million, and decreasing the metering penetration from 45.5 percent in January 2017 down to 40.3 percent in March 2020.

“Plugging the metering gap that is in excess of six million meters has been slow because even the recently introduced MAP regulations incorporate inappropriate meter pricing and so, it is not working as NERC/DisCos expected.

“The twin effects of the sudden increase in import duties of 35 percent on meter and NERC’s wrong pricing frustrated the good intentions of MAP” he noted.

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He appealed to the government to grant full waivers on the 35 percent increased duty surcharged on meters, until mass metering was achieved, and to fix an appropriate and commercial price on meters.

He added that the cap on estimated billing had discouraged consumers from obtaining meters under the MAP regulation, and urged the NERC to allow Discos go ahead with estimated billing, introducing the capping only after the massive meter roll-out after 18 months.

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Corporate deals

Deals: Dangote Sugar acquires Savannah Sugar Company Limited 

Dangote Sugar Refinery will henceforth assume all legal proceedings.



Dangote Sugar Refinery to merge with Savannah Sugar, Dangote was $4.3 billion richer in 2019, Dangote Sugar announces closed period, ban insider shareholders from trading , Dangote Cement: Weak revenue performance, elevated OPEX weigh on earnings

Dangote Sugar Refinery has been authorised to receive all the assets, liabilities and business undertakings, and property rights of Savannah Sugar Company Limited (SSCL) 

This was one of the resolutions passed at the court-ordered meeting of the members of Dangote Sugar Refinery Plc held on Thursday at the Eko Hotel & Suites, Victoria Island, Lagos 


According to the notice of the proceedings sent to the Nigeria Stock Exchange, and seen by Nairametrics, Dangote Sugar Refinery is hereby authorised to receive all the assets ((including all tax attributes, unutilized capital allowances, tax losses, withholding tax credits and any other tax refunds available subject to the approval of the FIRS), liabilities and business undertakings, including real property and intellectual property rights of Savannah Sugar Company Limited (“SSCL”) transferred by SSCL to the Company (pursuant to the Scheme of Arrangement between SSCL and its shareholders) upon the terms and subject to the conditions set out in the Scheme of Arrangement without any further act or deed”.  

Dangote Sugar Refinery will henceforth assume all legal proceedings, claims and litigation matters pending or contemplated by or against Savannah Sugar. 

In view of this acquisition, the court also ordered Dangote Sugar Refinery to issue and allot to the shareholders of Savannah sugar, 146,878,241 ordinary shares of N0.50 each in the share capital, for the 162,756,968 ordinary shares held by the Scheme Shareholders in SSCL 

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The Scheme Document dated Friday, May 29, 2020, was also approved at the meeting, and Directors of DSR were authorised to consent to any modifications that the Securities and Exchange Commission may deem fit, and give effect to the scheme.  

Dangote Sugar Refinery had earlier sent a disclosure notice to the NSE, announcing its plans to acquire Savannah Sugar Company Limited, subject to the approval of both company shareholders.  

Dangote industries recently sold its flour subsidiary, and this acquisition is part of an expansion strategy for Dangote Sugar Refinery, and the next stage of its backward integration plan to revolutionize the sugar sub-sector of Nigeria’s economy. 

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Corporate deals

Fairfax Africa Holdings enters purchase agreement with Helios Holdings Ltd 

Fairfax Africa Holdings Corp. agreed to merge with Helios Holdings Ltd.




Canada-based Fairfax Africa Holdings Corporation has reached an agreement to merge with Helios Holdings limited, the Africa-focused private equity firm which was co-founded by Tope Lawani and Babatunde Soyoye. The purpose of the merger is to create a truly pan-African investment firm.

A statement made available by Fairfax, as seen by Nairametrics, noted that when the deal is finalised, Fairfax Africa Holdings Corporation will be renamed Helios Fairfax Partners Corporation. The company will remain listed on the Toronto Stock Exchange and the Helios co-founders will be joint Chief Executives of the new company. 


The terms of the deal will also require Helios to exchange 45.6% of equity and voting interest in the new company. Helios will contribute its performance and management fees through its present and future holdings under the Helios funds, thereby making Helios Fairfax Partners Corporation one of the biggest Africa-focused asset management firms by complementing the experiences and funds of both companies under one umbrella. 

The new company will also have a larger capital base for diversified investment inflows to the continent through years of experience in third-party investment management operations and the support of longer-term institutional shareholders. 

The main objectives of this deal are summarised below:

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  • Helios Fairfax Partners Corporation to become the leading pan-Africa focused listed alternative asset manager with unique capabilities to invest across the continent
  • Creates a diversified investment platform combining best in class third-party investment management capabilities with the strength of long-term shareholders in a permanent capital vehicle
  • Provides an enlarged capital base, increasing capacity to invest as well as to launch additional and differentiated Africa focused asset management strategies and initiatives
  • Reinforces the parties’ shared long-term commitment to be a consistent and trusted provider of capital to growing African businesses across market cycles
  • Tope Lawani and Babatunde Soyoye, the co-founders and Managing Partners of Helios Investment Partners LLP, will become joint CEOs of the combined holding company, enabling the company to build on the track record they have established over the last 15 years

In his remarks, Tope Lawani disclosed that the deal will offer emerging market investors the opportunity to gain exposure to the continent through their portfolio.

“We take a long-term view on our investments, and many have proved resilient even in this pandemic with a number of our investments in sectors such as telecommunications, payments, and food,” Lawani said. 

He added that the transaction will offer Helios access to permanent capital from equity markets that can be used to accelerate its product and growth strategy.

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Helios, which was founded in 2004, has raised third party private capital for the past 15 years investing in Africa companies including First City Monument Bank (exiting in 2013), Interswitch, Vivo Energy and Helios Towers Plc. 

Fairfax was founded by Canadian Billionaire Prem Watsa and will own 45.6% of the Helios Fairfax Partners Corporation. Before the merger, Helios was raising $1.25 billion for its Africa focused fund and had landed a commitment of $100 million from the U.K’s CDC Group. 

You may read the full statement by Fairfax by clicking here.

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