Ted Iwere, Author at SME Finance

How To Apply For AfDB’s AgriPitch Competition

The African Development Bank’s Youth Agripreneur AgriPitch Competition in partnership with DealRoom aims to connect expansion-ready, youth-led African businesses with global investors (debt, equity and/grant)

The goal of the AgriPitch Competition is to promote innovation and entrepreneurship in agriculture among youth in Africa and to generate jobs, create wealth and improve livelihoods through inclusive growth across the continent.

Shortlisted businesses will participate in a virtual AgriPitch Competition from November 16-20, 2020, where winners will be chosen based on different categories under consideration.

The African Development Bank will award shortlisted businesses between US$10,000 and US$40,000 in the form of grant capital (US$120,000 in total is committed).

Eligibility

Companies that are in one of the following categories are eligible to apply for the AgriPitch Competition and Virtual Investor DealRoom:

Must be in an Agribusiness sector under any of these categories:

  • Start-ups: Must have a clearly defined prototype or proof of concept and may or may not have had any products introduced to the market.
  • Matured Start-ups: firms with existing market traction: technology, product, service, etc., already on the market with a clear investment ask and growth plan & strategy.
  • Women Empowered Businesses: In addition to the criteria for a mature start-up, firms must have at least 51% share of women ownership or founded by a woman.

Evaluation Criteria

All applicants should consider these criteria carefully as they build out their profile for submission.

 

  • Value Proposition and Innovation Rationale (30% weighting):
  1. How creative is the idea or how creatively the idea solves a problem related to ICT and agri-digitization?
  2. Gender responsiveness
  3. Addresses nutrition
  4. Job creation potential
  5. Competitive edge

 

  • Sustainability and Scalability (20% weighting):
  1. Sound environmental management systems
  2. Potential for scaling-up
  3. Sufficient and qualified staff, including management

 

  • Business Feasibility & Traction (30% weighting):
  1. Clear customer pain/need intensity and market size
  2. Commercial and technically feasible with strong profit margins
  3. Existing traction and customers (for matured start-ups)

 

  • Professionalism and Presentation of Business (5% weighting):
  1. Structure and presentation of the business model
  2. Ease of comprehension of the business
  3. Strong writing/presentation skills

 

  • Investment Appeal (15% weighting):

Investment pull based on respective early start-up, matured start-up, and all-star stage

 

How to Apply

Indicate your interest in African Development Bank’s AgriPitch competition by filling out the required details here https://asokoinsight.com/deals/submit/new?platform=afdb

N75 Billion MSME Survival Fund: FG Opens Registration Portal

The Federal Government has opened the portal for the registration of prospective beneficiaries of the Survival Fund.
The Survival Fund is the Federal Government’s business support initiative, that is aimed at tackling the economic challenges faced by small businesses as a result of the coronavirus outbreak.

The programme which according to the minister of state for industry, trade and investment, Mariam Katagum “will run for an initial period of three months, is targeting 1.7 million entities and individuals and has provisions for 45 per cent female-owned businesses and five per cent for those with special needs.”

In order to ensure a seamless registration process, the Project Delivery Office has designed a registration schedule.
As such, registration for Payroll Support will start with educational institutions (Private schools) on Monday and will be followed with businesses in the hospitality industry on Friday, September 25 beginning from 12 am.

The portal will also be open to other categories of small businesses from 12 am, on Monday, September 28, 2020.
Educational institutions interested in the scheme should log on to www.survivalfund.ng from 10 pm, to register for the payroll support initiative.

Note: Please ensure you register your business at www.smedanregister.ng before applying for the payroll support fund.

How To Apply For Ekiti Enterprise Challenge 2020

The Ekiti Enterprise Challenge 2020 which is organized by Enterprise Growth Initiative, is a Social Impact driven pitch competition that aims to identify, discover, fund and mentor innovative, creative and talented young entrepreneurs and business owners in Ekiti State.

The pitch competition has been scheduled to hold during the UN Global Entrepreneurship Week between Monday, November 16 to Sunday, November 22, 2020.

Benefits

The winning enterprise will receive a grant of ₦1 million while 3 runner ups will be awarded ₦500,000, ₦300,000, and ₦200,000 in consolation prizes respectively.

Eligibility

  1. Business must be established and resident in Ekiti state
  2. Applicants must be between 18 to 35 years of age
  3. Business must be at least 12 months old and already generating revenue
  4. Business must have the potential for exponential growth.
  5. Business must have been registered with CAC and have a corporate bank account with a corporate governance structure.
  6. Clarity business model with leadership capacity to deliver the proposed business value proposition.

To be eligible, your business must be within the following categories:

  • Innovation technology
  • Agriculture and food processing
  • Fashion designing
  • Tourism and hospitality
  • Art and crafts
  • Shoes and leatherwork production
  • Furniture and upholstery
  • Interior designs & decorations
  • Confectioneries and event management
  • Entertainment and  music productions
  • Green enterprises, waste management and recycling

How to Apply

Startups and business owners who are eligible and interested in the challenge should click here to apply – https://ekitienterprisechallenge.org/application-guideline/

Deadline

The application deadline is 30th September 2020.

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Federal Government Disburses 24 Million Naira Loan To 2,400 Entrepreneurs In Sokoto

The Minister of State, Labour and Employment, Festus Keyamo, says the FG has disbursed N24 million to 2,400 small scale entrepreneurs in Sokoto State.

Mr Keyamo said the funds were under the federal government’s Micro-Enterprise Enhancement Scheme (MEES) of the National Directorate for Employment (NDE). The scheme is designed to enhance the operational capacity of existing micro-enterprises. The beneficiaries are usually operators of existing micro-enterprises who receive the microloan package to expand their businesses and in turn improve their earnings.

Mr Keyamo reiterated the commitment of the President Muhammadu Buhari-led government to increase investment in the area of business empowerment among Nigerians, stressing that microeconomic growths remained the backbone of development.

The minister said Mr Buhari has great concern towards the development of all Nigerians irrespective of political inclinations.

Mr Keyamo commended the governor, Aminu Tambuwal, for emulating Mr Buhari on common grounds, in spite of their different views on politics and governance.

“Leaders ensure that after elections all government policies should affect every citizen, irrespective of political party differences.

Read Also: 5 Digital Lending Platforms For SMEs In Nigeria

“Such action fosters great unity among people and enhances public confidence on governance,” Mr Keyamo noted.
The minister further commended Mr Tambuwal for keying into federal government’s empowerment policies by liaising with Yusha’u Furniture Factory in the training of 1,700 youth on furniture making businesses.

The Director-General of the National Directorate of Employment (NDE), Dr Mohammed Nasir Ladan said the agency was encouraged by the effort of Sokoto orphanage home to commence the “Catch Them Young Entrepreneur Scheme” in Sokoto state.

He reiterated his determination to reduce the level of unemployment in the country through NDE skills acquisition programmes and schemes. He said that every jobless Nigerian would be given the opportunity and privilege to learn a skill and become self- employed.

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3 Tips For Managing Your Small Business Loan

Congratulations, your loan application has finally been approved and you got the loan. In fact, the funds have already been disbursed to the designated account, so what next?

What steps would you take to ensure that your business gets the most value out of this loan and ensure that you don’t default? To help you answer these questions and make the most use of your loan I have outlined 3 tips that would help you manage your business loan effectively.

Read More: SMEs Vital To African Agriculture – African Development Bank

  1. Create A Loan Budget And Stick to It – Before you start spending that loan the first thing you should do is prepare a simple budget for the loan. Outline the expenses you want to use the loan for and how you can repay the loan. To help make this process easily try out the funds from the loan in a separate account from your business. After you’ve prepared your loan budget ensure that you stick to it. You may be tempted to use some of the loans for some urgent expenses or anything else other than their intended purpose, don’t.
  2. Avoid Taking New Loans – Sometimes, after you have taken a loan and it seems insufficient or you are unable to pay it off for whatever reason don’t try taking another loan to finance the repayment. Apart from the additional costs, you would likely incur, you are simply digging a debt grave for your business and the more you borrow to pay yet another debt the deeper it goes. If you find yourself running into trouble with repayments, you should be cutting back costs or looking for ways to increase sales.
  3. Prioritize Loan Repayment– As much as you’re focused on investing the loan wisely, plan for its repayment. You can automate it for ease of payment. Because apart from the late fees, a poor loan repayment record would have a bad effect on your business credit score and that may make it more difficult for you to get more loans next time you ask for it. You want to avoid that, so make your loan repayment a priority.

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FG inaugurates N75bn SMEs COVID-19 stimulus schemes

The Federal Government on Thursday flagged off two schemes to financially support about 1.7 million micro, small and medium enterprises across the country with N75bn.

At a briefing on the flag-off of the National MSME Survival Fund and the Guaranteed Off-take Stimulus Schemes under the Nigeria Economic Sustainability Plan, the Minister of State for Industry, Trade and Investment, Mariam Katagum, said the schemes would impact positively on businesses in the country.

Read More: Nigerian Banks Write Off N1.9 Trillion Impaired Loans In Past Four Years.

The Economic Sustainability Plan was approved by the Federal Executive Council on June 24, 2020, following its initiation by the Economic Sustainability Committee that was established by the President, Muhammadu Buhari, on March 30, 2020.

The committee, which is chaired by the Vice President, Prof. Yemi Osinbajo, comprises of several ministers and the Group Managing Director of the Nigerian National Petroleum Corporation as well as the Governor of the Central Bank of Nigeria.

Despite the challenges posed by the COVID-19 pandemic globally, the Buhari administration has said it would not relent in its efforts towards improving the country’s healthcare infrastructure and economy, while creating more jobs for millions of Nigerians in different sectors, supporting small businesses, local production and manufacturing, as well as extending the social safety net for the most vulnerable in society, according to Vice President Yemi Osinbajo.

Speaking on the Buhari administration’s efforts to cushion the effects of the pandemic on Nigerians, the Vice President stated that improving healthcare infrastructure remains a major objective of the administration.

He said, “Out of the N500bn initial stimulus fund that is factored into the current budget, N126bn of it is going into healthcare.

In her address at the briefing, Katagum stated that in keeping to its promise to support businesses overcome the challenges posed by the COVID-19 pandemic, the Federal Government was set to commence nationwide implementation of the two MSME initiatives.

Katagum said the N60bn MSME Survival Fund and the Payroll Support schemes would be rolled out first, adding that the N15bn Guaranteed Off-take Scheme would then follow.

She said, “Both schemes are at the core of the N2.3tn stimulus package, also known as the Nigeria Economic Sustainability Plan being implemented to help cushion the impact of the COVID-19 pandemic.

“This is with a view to boosting the economy by saving existing jobs and creating new job opportunities.”

The minister said a 10-man committee, which she chairs, was inaugurated in August with membership from the private and public sectors including the Vice-Chairperson, Mrs Ibukun Awosika, Chairman of First Bank.

Katagum said the committee also had representatives of the National Association of Small and Medium Enterprises, adding that the team had developed a workable template for the execution of the programme.

She said, “The survival fund scheme is expected to commence immediately while the Guaranteed Off-take Scheme will follow as soon as the proper modalities are put in place to meet current realities.

The Director-General of Small and Medium Enterprises Development Agency (SMEDAN), Dr Dikko Umaru Radda, who thanked President Muhammadu Buhari on behalf of the MSMEs for the fund, said the Survival Fund was a welcome development to reduce the effect of COVID-19 on MSMEs.

The representative of the Organized Private Sector, who is also a Board of Trustees Member of the National Association of Small and Medium Enterprises (NASME), Ubadigbo Okonkwo, said the survival fund was a timely stimulus package for MSMEs in Nigeria.

However, he expressed concern about the short duration and small size of the schemes and urged the federal government to implement follow-up MSME support programmes at the planned expiry of the two schemes.

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Development Bank of Nigeria Advocates Sustainable Banking for Nigerian MFBs

The Development Bank of Nigeria Plc (DBN), a premier development finance institution with a huge influence in the Micro Finance Banks (MFB) ecosystem, has set out to act as a catalyst in helping to raise awareness around sustainability initiatives as well as provide technical assistance for its PFIs.

Read More: Nigeria’s Debt Rises 8.3% To 31 Trillion Naira In 3 Months – DMO

To this end, the bank recently organized a webinar session themed, “Creating a Sustainability Community of Practice for Nigerian Microfinance Banks” for MFBs that are working with it as Participating Financial Institution (PFIs).

According to DBN’s MD/CEO, Tony Okpanachi represented by Chief Operating Officer, Bonaventure Okhaimo, “The initiative is focused on further deepening DBN’s efforts at increasing awareness on sustainability issues, and also positively influence its Participating Financial Institutions (PFIs) on Sustainable Development Goals (SDG).”

He explained that the goal is to create an MFB community for information sharing and learning on sustainability initiatives and the implementation of strategies for financial institutions in Nigeria.

According to him, “Currently, the overall awareness of sustainability and its transitions for the microfinance ecosystem has not been clearly articulated in Nigeria. This is because most MFBs regard lending as the most essential service to be rendered to end-borrowers. “This session is designed to enable DBN affiliated MFBs to have a more robust proposition about sustainability which will open them up to the myriad of advantages, including external funding, generation of deeper trust with stakeholders, and legitimization of their operations along the lines of Sustainability.”

While DBN is driving this initiative, it has also been recognized that the support of industry regulators will go a long way in facilitating the desired response from the financial institutions.

In this regards, the Special Adviser to the CBN Governor on Sustainability, Dr Aisha Mahmoud, while delivering her keynote address during the DBN session, stated that “Deliberations on emerging issues of sustainability are important for the financial ecosystem.”

She stressed that MFBs by the virtue of their mandate is already practising the social pillar of sustainability by lending to the underserved sectors of the economy, but there is a need to focus more on the environmental impact of their lending by looking into the activities and operations of their borrowers through a sustainability lens.”

She added that today’s successful businesses are those that integrate sustainability into their operations.

According to her “We cannot ignore the environmental pillar because it is as important as the social pillar. Due to our way of unsustainable consumption and production, we are constantly depleting natural capital. We need to shift our growth pathway from the current trajectory to the one that improves the quality of human life while living within the carrying capacity of the planet earth.

She further added that “Based on discussions with a few MFBs, organizations oftentimes think sustainability is an additional cost to the business, but we need a shift from that perception because sustainability is a win-win situation that connects people, planet, and the economy.

“Studies have demonstrated how businesses that integrate sustainability well, outperform those that do not, as it lowers the cost of capital, results in better operational performance, and positively influences the stock price”.

To help MFBs in this direction, DBN’s Sustainability Specialist, Lolade Awogbade, said, “the discussion in the community will provide MFBs with increased knowledge on internal and external sustainability strategies in implementing their initiatives.

“The internal strategies will be guided by Sustainable Development Goals that embraces strategies inclusive of waste management, energy, gender and diversity policies, and the likes. The external will be business strategies focused on social and developmental objectives such as women empowerment, poverty eradication, and financial inclusion.”

The Bank’s sustainability specialist also mentioned that investing in social and environmental sustainability initiatives will not only help finance companies in fulfilling their social mission but also differentiate them from competitors, give access to new market segments, access to new funding and improve their brand and corporate image.

Based on feedback from participants, DBN commits that it will roll out periodical activities in the coming months to keep the conversation going. This will be in the forms of webinars for idea sharing and knowledge management, as well as the exchange of materials and expertise on sustainability issues.

It is hoped that the lead being taken by the Development Bank of Nigeria in helping to promote the sustainability principles to MFBs will usher in a new consciousness on sustainability needs and how the Bank’s strategic partners can successfully incorporate this thinking into their business model.

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CBN Releases Guidelines For Agribusiness Loans

The Central Bank of Nigeria (CBN) has released procedures for Nigerian youths willing to benefit from its Accelerated Agricultural Development Scheme (AADS).

According to the apex bank, the Programme is to engage a minimum of 370,000 youths in agricultural production across the country over the next three years in order to reduce unemployment among the youths in the country.

Read More: SMEs Vital To African Agriculture – African Development Bank

As it targets youths between ages 18 and 35 years, AADS is designed to increase agricultural production towards food security, job creation and economic diversification, the apex bank said.

The new guidelines show that the programme will focus on boosting production of two commodities in each state where the state has comparative strength.

In terms of mobilization and cluttering, the state government is to mobilize prospective young farmers with representation from all senatorial zones and provide agricultural land in contiguous locations in all senatorial zones. Minimum of 100 hectares per cluster and then, prospective entrepreneurs that meet the eligibility criteria will be grouped into clusters by commodity to be produced

In addition to this, the state government is to allocate 2-5 hectares of land per beneficiary while also providing access roads, water sources and other infrastructure that will enhance agricultural production on the land.

“States may charge a rental on land (Max. of N10,000 per ha) to defray the cost of land clearing and other infrastructure provided. Rental charges will be embedded in the Economics of Production (EoP) of the farmer,” according to the CBN.

In terms of financing, the apex bank has designated private finance initiatives (PFI) as its agents in disbursing the financing to the beneficiaries, which shall be in kind.

The guideline stipulates that the PFI purchase the inputs for on-selling to the beneficiaries, using CBN approved non-interest financing contract of Murabaha, Istisna’, etc at an all-inclusive rate of return of 9 per cent p.a.

For the financing of labour, the PFI shall use Service Ijarah or any other appropriate CBN approved contract for NIFIs with the same all-inclusive rate of return of 9 per cent.

“Financing tenor is 6 months for grains and broiler production (rice, maize, soybean etc); 18 months for cassava; 24 months for egg production and ruminants; 5 years for plantation crops etc.

“Average financing size of N250,000 per ha for arable crops; N500,000 per unit for livestock; and N1.5 million naira for plantation crops like cocoa, cashew and oil palm,” the guideline highlights.

On how to market produce after the cultivation, the apex bank said: “Anchors/Processors/Aggregators shall sign uptake agreement with Project Management Team (PMT), produce off-take shall be on cash and carry basis and contiguous nature of farms should reduce the logistics associated with aggregation.”

For eligible beneficiaries of the programme, CBN has pegged the age range between 18 and 35 years, adding that beneficiaries must sign an undertaking to abide by the terms of agreement of the Scheme.

Apart from AADS, the Central Bank of Nigeria (CBN) in its bid to ensure that agricultural businesses sustain their operations in the aftermath the COVID-19 pandemic, has also introduced other loan opportunities and fund interventions.

The Agri-Business/Small and Medium Enterprise Investment Scheme AGSMEIS Loan is an initiative to support the Federal Government’s efforts in the promotion of agricultural businesses and small/medium enterprises (SMEs) in the country, you can apply for the Loan with collateral for the AGSMEIS loan is been disbursed by NIRSAL Microfinance Bank and other Banks. Interested Nigerian engaged in Agriculture or other SME businesses can access up to N10 Million from the AGSMEIS Loan, at a single-digit interest rate of 9% per annum.

The Anchor Borrowers Programme (ABP), is also an initiative of the Central Bank of Nigeria (CBN) for the agricultural sector, it is in line with its developmental function of the apex bank.

The loan is targeted at smallholder farmers engaged in the production of identified commodities across the country. The Farmers should be in groups/cooperative(s) of between 5 and 20 for ease of administration. The ABP is not solely for farmers, businesses can also apply to become the Anchor (private large-scale integrated processors) and Inputs Suppliers.

Nigeria’s Debt Rises 8.3% To 31 Trillion Naira In 3 Months – DMO

Nigeria’s total debt stock has risen to N31 trillion as of June 2020, from N28.6tn reported in March, the Debt Management Office, (DMO) has said.

According to the periodic data which it released recently, DMO said the public debt stock consist of those for the Federal Government, the 36 state governments and the Federal Capital Territory (FCT).

Read More: Nigeria’s Unemployment Rate Jumps To 27.1%, Inflation Up 12%

The N31.009 trillion debt is about $85.897 billion compared to that of March which was N28.628tn was about $79.303bn, growing by N2.38tn or $6.59bn due to the $3.36bn Budget Support Loan from the International Monetary Fund, New Domestic Borrowing to finance the Revised 2020 Appropriation Act, the issuance of the N162.557 billion Sukuk, and Promissory Notes issued to settle Claims of Exporters.

The DMO expects the Public Debt Stock to grow as the balance of the New Domestic Borrowing is raised and expected disbursements are made by the World Bank, African Development Bank and the Islamic Development Bank which were arranged to finance the 2020 Budget.

Recall that the 2020 Appropriation Act had to be revised in the face of the adverse and severe impact of COVID-19 on Government’s revenues and increased expenditure needs on health and economic stimulus amongst others.

It said additional Promissory Notes are expected to be issued in the course of the year, this, and new borrowings by State Governments are also expected to increase the Public Debt Stock.

Experts who gave warnings during a one-day Webinar titled: ‘Are Chinese Infrastructure Loans Putting Nigeria on the Debt Trap Express,’ organized by the US – Nigeria Trade Council, has warned Nigeria strongly against the loans; arguing that the terms are hidden “debt traps” for the country.

In his presentation, the Managing Partner & CEO, Berkham Capital UK, Joseph Oyediran, kicked against the China infrastructure loans; arguing that Nigeria at the moment is clearly exhibiting the symptoms of a country that will default on payment.

According to Oyediran, the revenue streams for Nigeria to repay the loans within the specified period are not there; especially in the face of the impact of Covid-19 pandemic.

While stressing that with a debt profile put at about $65 billion, Nigeria was not looking healthy enough to repay the China loans, he described the loan as a debt trap for Nigeria, adding, that “the revenue source to pay back is just not there”.

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Starting A Business: Should You Start With a Loan?

When starting a business, an entrepreneur is often faced with so many questions that demand answers. One of those questions centres on how the business should be financed. Should you borrow money to start a business?

This question may seem simple at first but to be able to give the best answer for your business, you have to consider the advantages and disadvantages first. So to help guide you to the best answer to this question for your business, we have highlighted some of the pros and cons of starting a small business with a loan.

Read More: 6 Financial Facts Every Entrepreneur Should Know

Advantages of starting a business with a loan

  • Covers Startup Costs – One of the biggest reasons for getting a business loan when starting a business is to be able to cover the huge costs associated with it. Personal funds are rarely enough, especially as unbudgeted expenses may arise hence starting a business loan can be instrumental in covering these expenses that the business incurs at startup.
  • Readily Available Capital – Beyond the initial expenses, as a new business, it takes time to turn a profit but all the while your expenses don’t disappear till you can pay for them, they keep increasing regardless. Statistics show that it is at this critical stage that many businesses die due to under-capitalization. Having a business loan to work with at this critical stage of your business is essential to your survival. It provides your business with readily available capital to make a pivot, and cover your operating costs when you don’t have sufficient cash flow to keep your business afloat.

Disadvantages of starting a business with a loan

  • Personal Liability – Most businesses that start with a loan are often required to provide personal guarantees before they can access the loan. While this is important to de-risk the bank’s investment it implies that once your business defaults, you as a business owner would bear personal liability for the loan and your personal assets may be taken to pay off the loan.
  • Debt Pressure – Loans you have taken at the start of a new business have a tendency to put untold pressure on you as the decision-maker for the business. Banks and other lending institutions usually don’t care if your business has turned a profit before you’re required to start your loan repayment. This can be terrible for your business because your loan investment didn’t have enough time to grow your business as intended before you have to pull them out to repay your loan. This can have fatal effects on your business.
  • Additional Costs – loans are not given for free, if you decide to take up a loan to start your business you would have incurred additional business costs in interest rates, loan processing fees etc. While this may not be deadly, additional costs like these would lower your profitability and increase the expensive costs of running

Now that you have the top pros and cons for starting a business with a loan what do you think? Is it a good idea to start your business with a loan?

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