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Credit Facility: A Nostrum for Today’s Entrepreneurs

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credit facility

By Adeniyi Ogunfowoke

“I, too, used to run a business. I ran it for 18 months until I ran out of funds, after exhausting all my life’s savings. Great business idea, the market was huge and overwhelming. I started, I pushed it as much as I could. I served a market that consistently needed my service. To grow, I needed to inject money into the blood vessels of the business. But, I couldn’t. The resource was not available, and there was no one to help except the banks with their suicidal interest rates. Next to having a great business idea is access to funds to start and drive the business to growth”

What kind of business are you hoping to start? What kind of solution will your business provide? Is there a market for your business? How do you intend to run the venture? What’s your strategy for generating revenue and eventually, profit? How much time do you need to scale the business? How much resources would you require to flight the business? How are you sourcing for funds? Personal savings? Friends and family? Government loans? Bank loans? These are important considerations for any anyone who is considering entrepreneurship. Although, micro, small and medium sized businesses (MSMEs) are confronted with myriads of challenges today, some of which are tied to the general characteristics of the business environment in Nigeria: multiple taxation systems, unstable government policies, management problems, high cost of doing business, difficulties in accessing credit, and so on. Access to credit facility still remains the biggest challenge. And the reason is simple: while banks recognize the potential of most MSMEs as a source of revenue through credit facility, they are, most times, reluctant because of the difficulty attached to managing and assessing such risks. To curb these risks, many banks have resorted to implementing stringent screening measures and requirements when considering credit facility for MSMEs. These stringent measures however only ensure that only a few businesses are granted credit.

The Central Bank of Nigeria (CBN), in conjunction with the International Finance Corporation (IFC) recently published an article titled, ‘The Credit Crunch’, which alleged that 87 percent of MSME respondents had successful loan applications in the past, while 69 percent of MSMEs who wanted loans but did not apply felt that they will be rejected because of the collateral requirements and other associated conditions attached to the loan approval process. Moreover, there is also a perceived ‘one-size-fits-all’ approach by financial institutions towards loan applications by MSMEs and their employees. It thus appears that many MSMEs and their employees find the process of obtaining loans – whether real or perceived – to be discouraging.

Be that as it may, the federal government of Nigeria, in an effort to provide the needed capital support for entrepreneurs, has launched several credit facility initiatives through its various agencies saddled with the responsibility of growing small and medium scale businesses. While the efforts of the government might be said to be yielding substantial growth, truth is, not every entrepreneur will qualify or get a chance to merit such credit facilities. Moreover, the government cannot on its own cater to virtually all business proposals with viable potential. The present administration created a MarketMoni scheme through the Government Enterprise and Empowerment Programme (GEEP) as a Special Intervention Programme by providing loans between N10,000 and N100,000 to microenterprises, the segments of the society with the greatest difficulty accessing credit. The scheme, which is executed by the Bank of Industry (BOI), a parastatal of the Federal Ministry of Industry, Trade and Investment, directly impacts traders, market women, artisans, and farmers nationwide. According to the National Bureau of Statistics, of the 37 million small businesses in Nigeria, 36.9 million are micro enterprises, and these are responsible for almost 50 per cent of the country’s Gross Domestic Product and 80 percent of the workforce. Therefore, it might be impossible for only the government to provide credit facility for all of those micro enterprises.

Already, some private organisations, although relatively young, have been supporting and growing MSMEs for years. While their efforts might not have been noticed by the media, their impact on these micro, small and medium-sized businesses have been enormous. For instance, did you know that some of the merchants/vendors selling on Jumia enjoy a low-interest credit facility given to them by the eCommerce giant? The Jumia Lending Program is an initiative that gives sellers on the platform opportunity to grow and expand their businesses by granting them access to fast and easy short-term working capitals. Lots of entrepreneurs have been produced through this initiative. Some of the pecks of the lending initiative include quick registration process; flexible repayment plan within 1 – 6 months; no collateral; low-interest rate; no hidden or extra charges; and free training and support services to help merchants selling on the platform make best use of the loan and expand their businesses. Just like the MarketMoni scheme by the federal government, Jumia vendors also have between N10,000 – N100,000 credit facility available to them. Sellers who have benefitted immensely from Jumia’s low-interest credit facility today remain among the top sellers on the platform, cutting across a wide spectrum of category such as, home appliances, beauty and perfumes, phone and tablets, cameras and electronics, computing, TV, audio & video, and so on.

As a nation, it will be almost impossible for us to reap the dividends of the digital economy if businesses powering the sector are not adequately funded, or at least provided with low-interest credit facility which can help to grow, nurture and sustain the businesses. There have been many discourses on how Nigeria can take advantage of eCommerce to improve the lot of the very promising Nigeria economy. Although, much has not been seen of the government investing in this sector, it has nonetheless created an enabling environment for the existing players to operate. In turn, the players, of which Jumia remains the leader is empowering entrepreneurs on its platform to flourish through constant free business training and advice, provision of credit facility, and so on.

With over 50,000 active merchants/sellers on the platform, Jumia continues to connect consumers and businesses across Africa. Through its various online platforms, consumers can access a wide range of products and services, from basic consumer goods to online travel. The company helps consumers “save time and money”. Businesses use Jumia in order to distribute their products and services in a more efficient and scalable way.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Schneider Electric: Driving the Digital Transformation of Nigeria with Augmented Reality

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Schneider Electric

The future impact of Augmented Reality (AR) will significantly transform businesses and consumer marketplaces in Nigeria, should its adoption be accelerated across various industries and platforms, says Schneider Electric.

As more breakthroughs in technology continue to take root, the group has remained consistent in sensitizing its partners on the potential of AR, being one of the keys to digital transformation in the industry. Companies must therefore capitalize on AR and pursue the opportunities that can significantly boost operational productivity and enhance efficiency.

Speaking on this innovative technology, Belema Koleoso, Territory Technology Lead, Schneider Electric, says although much progress has been made since 2019 when Schneider Electric’s AR technology EcoStruxure Augmented Operator Advisor (EAO) was launched as a global hero offer, which works to enhance data accessibility for quicker and more accurate decision making, there remains a lethargy in the Nigerian market to adopt this technology.

Company campaigns have been run to sensitize clients to understand how EAO uses AR technology to optimize the operation and maintenance of industrial sites and equipment, AR aids effectiveness, helps to optimize human assets, and bridges the prevalent generational skill gaps. In this regard, she specifically highlighted the workforce crises that Schneider Electric foresees in the next 5-6 years, with the aged industrial population as the search for well-trained workers sometimes poses a challenge.

Belema says with AR, companies do not need to lose the experience plants cultivate with the exit of personnel, instead, years of training and experience can be “retained” through iteration of workforce turnover. For example, templates, assets, and manuals can be aggregated into the EOA application, customizable by the client; it puts real-time information at your fingertips, whenever and wherever it is needed, enabling operators to superimpose current data and virtual objects onto a cabinet, machine, or plant. This software combines contextual and local dynamic information for mobile users, enabling them to experience a fusion of the physical, real-life environment with virtual objects. It becomes a mobile work buddy for employees commencing the learning curve and in all reduces operational cost while increasing plant operational efficiency. This ensures that people who are put into the system meet the experience that others who passed through the system left behind.

AR presents completely new ways of executing tasks, with instant diagnosis, contactless maintenance, increased efficiency, and lower cost. Industries, including construction, aviation, consumer packaged goods, energy and chemical, mining and minerals etc., can use EOA to enhance their operations. The cloud-based software rides on any controller to learn activities and aggregates assets, moving past proprietary original equipment manufacturer parent protocols to focus on the tasks.

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Schneider Electric believes increased industry leaders across sectors can therefore use EOA to their advantage, where data drives processes and decisions metamorphosizing to “smart decision makers,” riding on data to make optimal decisions smarter and faster.

In retrospect, Belema says the pre-covid in Nigeria technologies like AR were seen as typically “nice to have.” She says she highly anticipates a time when more people will understand the immense benefit of this innovation and evaluate this technology as a necessity. “Often, the feedback on this is a nice-to-have, after a review of what AR offers. But I will push for people to look at it like this – When you have something that will optimize your processes, it moves from being a nice-to-have to a must-have.”

To drive this renewed mindset, the AR expert opines policies, such as the environmental sustainability policy, can bolster digital transformation. Stakeholders would need to advocate an optimized use of energy sustainably. Enforcement of which would naturally drive the adoption of technology across industries quicker.

“When people see that sustainability policies are enforced, for example, you are penalized for not meeting a target, or incentivized for meeting a target; you would see that the case would be different. Naturally, people will begin to adopt technology to meet their goals.”

She also advocates for Nigerians to consider AR as a total cost of investment that enhances optimal output, as customers are more prone to adopt a baseline approach, where they are satisfied with running their operations minimally without incurring additional costs.

With technology improving and becoming more widely available, it is undeniable that AR will become essential for businesses to thrive in the upcoming years. Schneider is optimistic that its position as a thought leader and industry partner in the digital transformation of energy management and automation is about to gain new ground, enabling the emergence of a new landscape of energy, paradigm shifts for the industry, and a revolutionized experience.

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Climate Change: Between Harriman and Kayanja Ideologies

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By Jerome-Mario Chijioke Utomi

The debate on climate change is among the most presently discussed topics on the earth’s surface. All these years, I have, going by the commentaries from the Western world, believed that Africa’s non-commitment to the call for global action on climate change was responsible for the real and imaginary challenges confronting the continent.

Making this perceived climate change challenge look real was the recent news report that to tackle the problems, the World Bank Group has committed about $70 billion and urged governments of different nations to set up structures to engage and access the fund.

However, such a belief system recently underwent a positive transformation while listening to Professor Tosan Harriman of Bayero University, Kano, Nigeria.

Tosan, who spoke at the GbaramatuVoice Niger Delta Economic Discourse series held in Warri, Delta State, among other things, said; “the truth is this, we saw the hypocrisy of these people (Western worlds) recently when, because of the Ukraine-Russian war, they are not talking anymore about clean energy, rather, we see them go back again focusing on coal, getting out coal to drive the heat.”

“Africa cannot give away its resources because Africa doesn’t need the English of climate change. Our continent is blessed, our continent has resources, and our continent is galvanizing on those resources to ensure there’s a global world order. Taking Africa’s resources from Africa is like committing Africa to another new colonial tendency that will finally incapacitate and make it useful in the global situation of things, and that’s exactly what my argument has been.

“So, quickly, therefore, let’s have our mindset reconstructed about the fact that we are not a danger to Europe and America; we are not a danger to politics of climate change. The only grammar behind climate change is the economy.

“If they take from you the resources that offered you a comparative advantage, it opens them up to their economic value in the context of a global chain, in the context of a global productivity chain, it opens them up to their economic value where they now begin to sell clean energy to people like us in Africa who don’t need it. It’s so important we have these facts properly straightened out before we get into this other issue.

“The world has been talking about clean energy, what we call resistance against greenhouse gas emission. The kind of carbon deducted from the exploration of our crude oil, those are the carbons that we have, and that’s what the world has been talking about. They needed clean energy that would help the Arctic Circle maintain its height and then help the entire ecosystem to be properly balanced along the lines of certain determination that they thought had been there from the beginning and all of that.

“In Europe and America, if you actually desire clean energy, you should not in the 21st century be talking about coal because coal is all about greenhouse gas emission. If you go to the home of the Queen, you will see them using coal, and I keep making this argument that if Norway as a nation has the level of oil we have, nobody will be talking about greenhouse gas, nobody will be talking about climate change, and I have always held the position that every nation should be allowed to grow within the context of his own resources.”

He said that the best the world can do, which is an issue he raised at the Cairo 27th conference recently held, is that we should look at the conditions of African nations, what we call the dependent nations and all of that, dependent on the global world situation and all of that.

“We should look at their conditions, and then we can’t take them; we can’t take from them the issues that directly propel their sustenance; we can’t be talking of climate change when the entire nation of Africa depends on what creates a greenhouse. The best we can do is to scientifically, now begin to look at this resource and then redesign it in such a way as to mitigate the fears that are already being expressed by these other groups fighting for climate change. Those are the issues we raised, and it’s so profound that the world needs to hear us,” he concluded.

Comparatively, while Professor Tosan’s ideology/argument made a whole lot of sense to me, I, however, still recall how Mr Ronald Kayanja, Director of the United Nations Information Centre (UNIC), spoke on the same topic (climate change) but maintained a different view.

This was at a function on Friday, September 20, 2019, in Lagos to mark the year’s International Day of Peace, which had as a theme Climate Action For Peace. Kayanja’s understanding and postulations about climate change were the direct opposite of Tosan’s argument.

Apart from Kayanjas’ definition of climate change as changes in these weather patterns over several decades or more which make a place become warmer or receive more rain or get drier, what made the lecture crucial was the awareness of the dangers of and warning on the urgent need to address climate changes which he said have become even clearer with the release of a major report in October 2018 by the world-leading scientific body for the assessment of climate change, the Intergovernmental Panel on Climate Change(IPCC), warning that in order to avoid catastrophe, we must not reach 1.5 C and 2oC.

In a similar style, Kayanja in that presentation used an analytical method and properly framed arguments to underline how; the current conflict in North-East Nigeria is not unrelated to the changes in climate in that region over time. As well as provides a link as to how; the climate change challenge also sets the stage for the farmer and herder violence witnessed in parts of West Africa and many countries that face violent conflicts in Africa: Somalia, the Democratic Republic of the Congo, South Sudan, Sudan (Darfur), Mali and the Central Africa Republic.

He argued that local tensions over access to food and water resources could spill over into neighbouring countries as people seek to find additional resources and safety – placing more strain on the resources of those countries, which could amplify tensions. In these instances, climate change does not directly cause conflict over diminishing access to resources, but it multiplies underlying natural resource stresses, increasing the chances of a conflict.

As to what should be done to this appalling situation, the UN boss said that the UN Secretary-General had made climate action a major part of his global advocacy, calling on all member states to double their ambition to save our planet.

For me, as the debate rages, it is important to underline that Kayanja’s position looks alluring in principle. But then, this piece holds the opinion that African leaders and policymakers must not allow the propositions canvassed by Tosan go with political winds.

Utomi Jerome-Mario is the Programme Coordinator (Media and Policy) at Social and Economic Justice Advocacy (SEJA), Lagos. He can be reached via jeromeutomi@yahoo.com/08032725374

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Economy: Simplistic Thinking in Africa and African American Communities

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African American communities

By Nneka Okumazie

There is caution in African American communities not to criticise each other to avoid appearing to take the side of others against the community. This agreement, useful in a few cases, has become part of the problem of the community where there is an appearance to condone horrible things.

If the problem is to avoid sounding like others, then another channel to criticize but not sound like others should have been sought.

In the community, the killings of the same kind, even for some who have made it, sometimes over absurd things, meets mute responses or fierce firestorm from the leaders of the community.

Do not criticize has allowed all kinds of comments and behaviours to fester in the community, and it keeps getting worse, but everyone minds their business because black people come first even if it is evil.

There is a limit to protests. There is a limit to heightened sensitivity over the past. There is a limit to ignoring internal responsibility. Proclamation of emancipation is a starting point, but every other way, as a people, to ensure more strength has to be sought. Civil rights are great but there is a need for the kind of economic success of Asia to be strong and not act or be seen as a victim because victimhood is limited.

There is a limit to entitlement for the sake of it, in a time when economic concerns are a priority for all. An individual success story is already old for a people with the majority on the lower economic and social side. A charity that benefits a small number of people in a small community is negligible for people. Speaking out for the sake of it, against oppression by other races, is also limited for a successful black. Whatever feel-good story on history or origin may promote fantasy, but ensures backwardness in reality.

As more blacks, everywhere, are getting prominent and failing in some positions, the other races have been able to lob criticisms without getting racial, something that many blacks do not attempt for each other.

There are streams of simplistic thinking that are static ends for a people, and breaking out of it, as a people is important for progress.

In Africa, most people keep saying the government is the problem or corruption. But there are different countries, structures, regions, states, governments, etc. yet there is hardly a major success story comparable with some in Asia.

Asian success is different people in different sectors making progress ahead and above the government so that government gets to adopt those into policy. If everyone with some responsibility or a few in different fields pursues major progress, the government does not have the power to crush all of them. The government would have to adopt or enable some. The excellence that made those would have them draw others. The government too would promote some policies whose success or adoption would meet the advancement the people are seeking, so it would work.

But what is obvious in most African countries is that the government often has the best answer, which is often really low, so from other sectors, things are lower, so most things are worse. And whenever there is a crisis, it is even far worse, because those who could try have failed, so left to the government, everything goes down.

Government is not the problem in any African country so long they have sectors and people who hold responsibility. Simplistic thinking says it is government.

Some have also said that they should use African religions for swearing officials into the office to prevent corruption. If enacted, some people would find a way around it, so it solves nothing.

There are desperate Africans who migrate to other continents, by the sea, desert and other ways, to find survival. Their move is parallel to professionals who run away too, because the place is bad, as a belief, not because they are actually in some dire situation.

There is a comment on brain drain, but brain drain is not a problem for professionals who are replaceable. Many of them would not do better than what government would do, so leaving or staying makes little difference, so no matter the certificates or certifications, it is not a brain drain if their work had not been consistently aiming at progress.

For many, success is seen as location or position when success is time or other things not related to material or resources. The things that are needed for progress, like courage, fairness, sincerity, honour, and selfless diligence for all that is not available, makes many to point to the wrong things.

[Psalm 144:4, Man is like to vanity: his days are as a shadow that passeth away.]

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