In 2013, SMEDAN and the National Bureau of Statistics carried out a detailed survey of Micro, Small and Medium Enterprises (MSME) in Nigeria. The Survey Summary Report shows that we have a total of 37,067,416 MSMEs (Micro – 36,994,578; Small – 68, 168; and Medium – 4,670). Most of the programmes for the MSME sector by government agencies and private sector organisations clearly exclude the micro businesses. The chances of micro businesses, which account for about 99% of MSMEs, to access funds from the banks or government intervention initiatives are very slim if not impossible.
Micro-Finance Banks which are designed to support micro businesses have their challenges and shortcomings. They cannot access funds for small businesses from commercial banks or even the Central Bank of Nigeria without one form of guarantee/collateral or the other. They are expected to meet some conditions for disbursement and also guarantee repayment by the borrowers. The Banks, including micro-finance banks, are in business to make money, and cannot really be expected to give out loans to small businesses if they are not sure of repayment.
Where small businesses are able to access funds from micro-finance banks, the interest rate is monthly, very high and, usually with no period of moratorium. Interest rate can be as high as 5% per month. Many businesses cannot pay this high interest and the principal and still remain profitable. Consequently, we have owners of micro businesses living from hand to mouth every month, choked by the burden of debt, including interest, payable to micro-finance banks.
Government needs to provide intervention funds that are truly meant for micro- and start-up businesses. All stakeholders should be involved to work out conditions,which borrowers can identify with, that will ensure loan repayment.
Tony Elumelu Foundation Grant for Start-Up Businesses
Tony Elumelu Foundation’s Entrepreneurship Programme gives out $5,000 every year to 1,000 carefully selected start up entrepreneurs all over Africa as grant, and subsequently another $5,000 each as loan. The programme was launched last year and the first set of 1,000 beneficiaries received their $5,000 grant a few months ago. Each year, the programme starts with applications from January 1st to March 1st. The next cycle of the programme will commence in January, 2016. The areas of interest include but not limited to: Agriculture, ICT, Housing, Media, Education, Transportation, Textiles and Manufacturing.It is very competitive and requires hardwork to present a winning business plan. If you are interested in the grant, this is the time to start to prepare your business plan for the 2016 edition. You can be among the 2016 winners. Those who won in the 2015 edition are not extra-ordinary people. They are ordinary people with extra-ordinary determination who worked hard to succeed.