Though it is generally agreed that lack of or inadequate access to cheap funds is one of the biggest problems confrontingmicro, small and medium-sized enterprises (MSMEs) in Nigeria, there are however some not-so-difficult sources of funds available for MSMEs and entrepreneurs in the country. And moreover these funding organizations provide funds at rates far cheaper than you can get in any bank in Nigeria.
These include Bank of Industry (BoI) loans,Lagos State Employment Trust Fund (LSETF), Federal Government’s Special Intervention Fund (SIF) for MSMEs, Tony Elumelu Foundation (TEF) grant and, GroFin Fund, amongst others.
Bank of Industry
Bank of Industry (BoI) is a development finance institution (DFI) that offers entrepreneurs in Nigeria cheap or single-digit funds, often at nine percent lending rate.
The bank manages many intervention funds targeted at the MSMEs sub-sector by government and private organisations. The funds that entrepreneurs can access from BoI include: Graduate Entrepreneurship Fund (GEF), which is meant for serving members of the National Youth Service Corps (NYSC). Candidates are allowed to submit their business ideas, which are then reviewed by a team of experts. The NYSC members whose ideas are marketable and bankable are then selected, trained for four weeks and there after loaned between N500,000 and N2 million.
Others are the Cottage Agro Processing (CAP) Fund for small and medium agro processors; Nolly Fund for stakeholders in the Nollywood industry, Fashion Fund for designers and other players in the value chain, a fund for the automotive industry and a N5 billion fund from Aliko Dangote to finance SMEs at a single digit rate.
The Lagos State Employment Trust Fund (LSETF) is a N25 billion fund set aside by Lagos State government to support operators of MSMEs resident in the state. Under the scheme, MSMEs can access loans between N250,000 and N5 million at an interest rate of five percent per annum, with a tenor ranging from one to three years.
The requirements to access the fund include: government issued ID and LASSRA card as evidence that they reside in Lagos, evidence of tax payment or registration details, evidence of trading certificate, proof of company registration, bank statement for a period of up to six months, and one or two guarantors.
The Special Intervention Fund (SIF) for MSMEs is a N5 billion fund set aside by the Federal Government to provide subsidized loans to MSMEs at single digit (9 percent per annum) all inclusive interest rate. The fund is also to cater for applications received from Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) under the National Enterprise Development Programme (NEDEP) scheme. It is to be utilized specifically for SMEs engaged in manufacturing and agro-processing businesses with emphasis on value addition to local raw materials.
The fund, managed by BoI, can be assessed by duly registered limited liability companies, enterprises and cooperatives in Nigeria.
The Tony Elumelu Foundation Entrepreneurship Programmeis a scheme whereby$100 million was set aside over a ten year period to identify/create10,000 African startups and entrepreneurs with ideas that have the potential to succeed, grow the businesses through business skills training, mentoring, access to seed capital funding of $10,000, information and membership in our Africa-wide alumni network. Selection into the programme involves a thorough process with no quotas of any kind to simply identify the game changers in the continent. Up to 10,000 entrepreneurs are expected to be shortlisted for the programme every year.
GroFin, a development financier, committed over $500 million to funding of MSMEs in Nigeria.
The firm has five different types of fund: Aspire Nigeria Fund, Growth Africa Fund, Small Growing Business Fund, Aspire Small Business Fund and Aspire Growth Fund.
The Aspire Nigeria Fund, Growth Africa Fund and Small Growing Business Fund cater for all parts of Nigeria except Niger Delta region.
The Niger Delta is catered for by the Aspire Small Business Fund and the Aspire Growth Fund. Aspire Small Business Fund provides between $10,000 and $100,000 to small business owners in the oil-rich region, while Aspire Growth Fund frees between $100,000 and $3 million to businesses to stimulate growth in the area.