Over 70 million
people — half the nation’s population — live on less than N100 per day, unable
to meet their basic human needs. A subset, approximately 38million people, or
10.9 million families in Nigeria, live in “absolute poverty”. Malnutrition, lack
of health care, substandard housing and illiteracy breed desperation, disease
and daily suffering. Poverty traps future generations in a vicious cycle without
hope or opportunity. In an increasingly globalize world, no one is immune to
these problems.
Most of the world’s poor are self-employed. Each day, without the
security of formal jobs, they eke out livings, whether it is by raising
chickens, selling farm produce in markets or weaving baskets. Despite working
from dawn to dusk, there is no money left over to improve their quality of life
or expand their businesses. All they earn goes toward basic survival.
This emerging SME development and funding movement combines the
established tradition of participation, collaborative, interactive culture of the
Internet. It is built on the belief that everyone should have the freedom to
support, loan, invest and access SME funds without constraint. Entrepreneurs,
microfinance institutions and others who share this belief are gathering
together as part of a nation effort to make SME development both more accessible
and more effective.
The expanding number of microfinance institutions in the country
has created fertile ground for this effort. Adopt a small business project
resources include openly licensed downloadable materials, writing business
plans, financial plan templates, software and other materials that support
making SME development free and accessible to everyone. They contribute to
making financial literacy more accessible, especially where money for training
materials is scarce. They also nourish the kind of participatory culture of
personal development, creative thinking, concept development and cooperation that rapidly
changing mediocrity in our current society.
There are many barriers to realizing this vision. Most
entrepreneurs remain unaware of the potentially growing pool of available SME
funds in the economy. Our governments and financial institutions are either
unaware or unconvinced of the importance of small and medium sized enterprises
to the building of the MDG goal. High interest rates and countless number of
documents to be made available while an entrepreneur seek loan creates
discouragement, confusion and ineffectiveness of various policies proposed by
the government over the decades. And, of course, the majority of the populace
does not yet have access to formal business development training and
opportunities that exist in the current licensing of close to a thousand
microfinance banks in the country.
THE PROBLEM
The lower-income segments of Nigeria benefit when SMEs have
better access to finances because they alleviate poverty by creating more jobs
and better wages. And as a recent World Bank report noted, “The bulk of evidence
suggests that developing the financial sector and improving access to finance
are likely not only to accelerate economic growth, but also to reduce inequality
and poverty.”
But there are a number of barriers to investing
profitably in these growth opportunities. Local financial institutions are
reluctant to lend to SMEs because of higher perceived risks, lack of collateral
and prohibitive transaction costs. Equity investors share these concerns and
also struggle with illiquidity, particularly because they lack viable exit
options. And many SMEs operate outside of legal and regulatory systems,
characterized by widespread informality, low productivity, and lack of firm
governance and reliable information (including normal accounting procedures).
Today, in Nigeria, less than 1% in actively managed investment fund institution
specifically targets the SME sector.
OUR APPROACH
Owing to the fact that, big names in the likes of Alhaji
Aliko Dangote, Mike Adenuga, Jimoh Ibrahim, Prof. Pat Utomi started off as a
small enterprise owners. We want to create the kind of opportunities that exist for these Icons to every ordinary
Nigerian. The instruments that gave our commercial banks
a chance to grow – well-developed capital markets and financial products – don’t
exist in many parts of the world right now . . . but they can.
SMEfunds.com aspires to combine innovation, partnership,
collaboration, information, and technology in an effort to transform the way
SMEs are linked to sources of finance. We will bring a combination of loan fund,
grant money, investment capital, and hands-on engagement to attempt new
approaches. Your loan or grant for a small business is perceived to be the
business ADOPTION. Imagine a nation where every Big business will loan a tiny
fund to kick - start a Small business! We are set to pursue a simple bi-lateral
approach to increase the flow of finance to the missing middle.
1. We hope to
focus on investing in technology that create contact platform where
entrepreneurs with small businesses could meet with potential investors that
might be interested in providing the required capital or small loan to start such
ventures, making it easier and cheaper for investors to find and make
investments in SMEs. Because most investors lack the information they need to
make investments, and where information does exist, it is often difficult to get
or in a non-standardized format. Since investments in SMEs are so costly to
source, make and monitor, investors often put their money elsewhere. We shall
strive to improve business deal structures, so that each deal is, on average,
lower cost and higher return. Largely, with the cooperation of our partners – we
hope to develop and invest in the tools and systems that make it easier for
growth capital to flow to SMEs. We will look for opportunities to enable
investors to find entrepreneurs and with the partnership of Microfinance Banks,
we hope to reach every local government and markets.
Secondly, we will invest in the SME market
ourselves. By becoming active participants, SMEfunds.com will also become a user of
the tools we are creating and refining, and will work to improve them and more
accessible. We want to demonstrate that it is possible to make a profit
alongside being socially responsible by
investing in SMEs. We also want to foster new investment mechanisms. These might
include peer-to-peer investment club tools, Campus outreach and aggregator or
other network models. We will partner on Adopt a Business Projects in this area.
This will happen nationwide where SMEfunds.com partnership and technical expertise
can play a role in helping to grow the missing middle.
EXPECTED OUTCOME/BENEFIT
These strategies represent more than just the right thing to do.
They constitute a wise investment in the development of SMEs and building the
Nigerian economy for the 21st century. They will make it possible to redirect
funds from expensive business plans towards better small businesses. They will
help microfinance institutions do better in their service by providing more fund
and new opportunities for visibility and global impact. They will accelerate
innovation in business conduct. They will give more control over
entrepreneurship to the entrepreneurs themselves. These are strategies that make
sense for everyone.
Tons of organizations, foundations, individuals, microfinance
institutions and cooperatives are already involved in small business finance
initiatives. We now have the opportunity to grow this movement to include
millions of companies and organizations from all corners of Nigeria, richer and
poorer. We have the chance to reach out to policymakers, working together to
seize the opportunities ahead. We have the opportunity to engage successful
entrepreneurs and philanthropists who are capable of developing innovative
business support models. We have a chance to nurture a new generation of
entrepreneurs who engage with economic growth oriented ideas, are empowered by
their creativities and geniuses, their new knowledge and insights with others.
Most importantly, we have an opportunity to dramatically improve the lives of
millions of people in Nigeria through freely available, low-interest rate,
timely funding measures to the emerging generation.
