The Federal Government of Nigeria is set to roll out palliatives to assist women-owned medium and small businesses (MSME’s) recover from the impact of the pandemic.
This was disclosed by the Minister of Women Affairs, Mrs Pauline Tallen, in Abuja during the virtual E-launch of the National Survey on the impact of COVID-19 on women-owned businesses in Nigeria, monitored by NAN.
According to Tallen, the survey captured trends and patterns of the losses caused by the pandemic on women-owned businesses, and will now guide the government’s move to revive the affected businesses.
The impact of the pandemic on micro, small and medium enterprises (MSMEs) has been quite massive, and resulted in unforeseen losses for business owners, she noted.
“We are all currently experiencing the effects, which have crippled the supply chain of businesses, with dire consequences on MSMEs, where the majority of women’s owned businesses are situated,” she said.
She noted that the government had commenced the implementation of the findings of the survey, through the ongoing UN Women Assisted Palliative Distribution Project, targeted at poor women in 17 states of the federation.
In addition, the ministry of women affairs is also set to scale-up some projects for women in National Empowerment Fund (NaWEF), Government Empowerment and Enterprise Programme (GEEP) and the Business Development Fund for Women (BUDFOW).
Other areas include the ECOWAS and Access Bank 50 Million Women Speak Platform Project (50MWSPP), the Trust Fund agreement with the United Nations Industrial Development Organization (UNIDO) to implement the HP-LIFE entrepreneurship and job creation project.
Tallen said further that the ministry would also engage with the Nigeria for Women Project (NFWP), and conduct a mapping of state-level interventions on COVID-19.
She also encouraged policymakers, development partners, and donor agencies to adopt the report’s recommendation for the immediate and post COVID-19 responses for women entrepreneurs.
“The Ministry is engaging with States, relevant government institutions, NGOs, business groups, PWDs cooperative societies, elderly cooperative groups, and women-focused groups to achieve this.
“I want to encourage our partners to not only stop here but let us together again look at the possibility of conducting a follow-up survey to track the progress of women entrepreneurs recovery.
The survey was conducted by NACCIMA and SME.NG, and it contained recommendations in retooling policies to address both immediate and post COVID-19 strategies as well as the way forward.
How SMEs can access capital in Nigeria
Despite the global consensus that SMEs are crucial to economic development, access to funds remains a militating factor against the sector’s growth.
The significance of SMEs for any country, especially Nigeria, cannot be overemphasized. It is, therefore, not surprising that SMEs constitute one of the bedrocks of economic development in the country. This makes it a sector that should be given utmost priority by the government.
To get started, the government needs to make funding more accessible to small and medium enterprises at low interest rate. Reason being that they need capital to thrive and nurture their businesses. Despite the global consensus that SMEs are crucial to economic development, access to funds remains a militating factor against the growth of SMEs in both developed and developing nations of the world.
The federal government of Nigeria with the support of the World Bank and the African Development Bank have tried in the past to assist SMEs through various credit schemes and loans structured to fund Small and Medium Enterprises, some of which are World Bank SME loan scheme, African Development Bank Export Stimulation Loan scheme; CBN Rediscounting and Re-financing Facility, National Economic Reconstruction Fund, Bank of Industry and the Graduate Employment Loan Scheme initiated by the National Directorate of Employment. Moreso, there are other ways that SMEs can be funded which are through Bootstrapping, loans from banks, moneylenders and grants from government institutions and non-governmental institutions.
Source: Nigerian Institute for Social & Economic Research
According to NISER findings, about 73% of SMEs raised their funds through Boostrapping (personal savings), about 2% obtained their funds from financial institutions, while 0.21% obtained their funds from other sources.
Here are some ways that SMEs are can access funds in Nigeria.
Accessing loans from banks
Banks (Commercial, Merchant & Development banks) offer credits to Small & Medium Enterprise in Nigeria. Before giving you a loan, they need to ascertain that you are creditworthy, and your business would have gotten to a particular stage. Also, you need to know that before applying for a loan, your small-scale business must conform with the goals and interest of the financial institution you want to apply to. Other things banks put into consideration before disbursing a loan are a well-written business plan, a financial record, collateral, and a guarantor. Nevertheless, many financial institutions are sceptical about giving SMEs loans because of the associated risks. Some prefer to pay the fine imposed for not meeting the target of giving SMEs loans than run the risk of being exposed to them.
Funding from Small and Medium Industries Equity Investment Scheme (SMIEIS)
Another source of funding for SMEs in Nigeria is the Small and Medium Industries Equity Investment Scheme (SMIEIS) Fund. This type of funding is designed to finance SMEs through venture capital. This initiative is from the government and its aim is to advance SMEs to drive industrialisation, poverty mitigation, sustainable economic development, and creation of employment. Venture Capital financing provides funds as a loan to SMEs with the idea of converting the debt capital into equity in future. Venture capital may be regarded as an equity investment where investors expect significant capital gains in return for accepting the risk that they may lose all their equity. To be eligible for equity funding under the scheme, a prospective beneficiary shall have the following:
- Be registered as a limited liability company with the Corporate Affairs Commission and comply with all relevant regulations of the Companies and Allied Matters Act (2020) such as filing of annual returns, including audited financial statements.
- Be in compliance with all applicable tax laws and regulations and render regular returns to the appropriate authorities.
Grants from non-governmental organisations/foundations
Business grants are another source of funding and they are mostly given by NGOs and foundations. These grants can be accessed by individuals, firms/company, business, or corporations to develop their businesses or scale up operations. One of the best ways to get finance for business or ideas is getting a grant. While a loan is a good alternative, a grant is far better than a loan. It gives you the peace of mind to build and grow your business or idea. It is like getting “free money.” There are many organizations that offer grants in Nigeria, Africa and worldwide. Some of these organizations are the Tony Elumelu Foundation, Bank of Industry, YouWIN, AYEEN financial grant, etc.
This is a situation where business owners resort to funding their businesses with their savings and revenue without the support of venture capitalists or bank loans. Apart from personal savings, financial support for businesses, especially at the startup stage, can also be sourced from relatives and friends.
Getting loans from microfinance schemes/moneylenders
Due to the rigorous processes and high interest rates demanded by commercial banks, Microfinance banks were established to assist small businesses in securing loans. SMEs are eligible for Microfinance loans if they meet the requirements stipulated by the bank.
In conclusion, SMEs constitute the driving force of industrial growth and development in the country. The government should focus on and nurture the sector by making funds at low-interest rates more accessible to players in it to help them thrive.
TLG Capital and Fidelity Bank to invest $20 million on Nigerian SMEs
TLG Capital announced that it would be investing with Fidelity Bank Plc amount to the tune of $20 million on SMEs in Nigeria
Private Equity firm, TLG Capital has announced that it would be investing together with Fidelity Bank Plc, an amount to the tune of $20 million on SMEs in Nigeria.
The funds will be channelled through TLG’s Africa Growth Impact Fund (ADIF), towards the development of SMEs in the country. Notably, the fund will be directed to SMEs that are focused on healthcare, education, consumer sectors, amongst others.
This new investment is in line with the bank’s move to provide innovative funding options and other forms of relevant support to entrepreneurs in the country.
What you need to know
- Fidelity Bank Plc is a commercial bank in Nigeria with over 5 million customers, serviced across its 250 business offices and other digital banking channels.
- According to information from the website of TLG Capital, a total of $303 million loans was still outstanding to SMEs and the unbanked through its portfolio companies.
Why this matters
This new investment will come as good news to SMEs and other entrepreneurs in the country, especially those seeking to obtain loans in the listed sectors.
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