NIGERIA NIGERIA SME’S & Diaspora SME’S & Diaspora

Engagement Opportunities & Engagement Opportunities & ChallengesChallenges

NIGERIA

SME’s – the economic growth engine

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Presentation by Presentation by

Clive CarpenterClive Carpenter

Vice Chairman and Nigeria Desk Vice Chairman and Nigeria Desk OfficerOfficer

Business Council for Africa West & Business Council for Africa West & SouthernSouthern

March, 2014March, 2014 2

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NIGERIA’s SME’s

Vast potential but SME’s not loved by the

banks!

SME CHARACTERISTICSSME CHARACTERISTICS SME’s across the globe fail to get the attention SME’s across the globe fail to get the attention

they they

deservedeserve SME’s are the growth engine of any economy – SME’s are the growth engine of any economy –

creating a multiplier effectcreating a multiplier effect Today’s SME may be tomorrow’s Nestle, Today’s SME may be tomorrow’s Nestle,

Dangote, Diageo or Shell perhapsDangote, Diageo or Shell perhaps SME’s outnumber large established businesses SME’s outnumber large established businesses

by a huge marginby a huge margin SME’s collectively employ more people than SME’s collectively employ more people than

large established companieslarge established companies SME’s are often responsible for driving SME’s are often responsible for driving

innovation and competition in many economic innovation and competition in many economic sectorssectors

SME’s need intensive care and nurturing to SME’s need intensive care and nurturing to take-off on the path to growth and prosperitytake-off on the path to growth and prosperity 4

SME CHALLENGESSME CHALLENGES Ability to raise finance Ability to raise finance Ability to present financial application in a form Ability to present financial application in a form

acceptable to a lender – i.e. Business Plan, Cash acceptable to a lender – i.e. Business Plan, Cash Flow Projections, P&L Forecasts, Budgets, etc.Flow Projections, P&L Forecasts, Budgets, etc.

SME promoters are usually entrepreneurs – SME promoters are usually entrepreneurs – resourceful people with ideas, willing to take resourceful people with ideas, willing to take risks, but often poor at translating ideas into clear risks, but often poor at translating ideas into clear documentary supportdocumentary support

SME’s are not very profitable for banks and SME’s are not very profitable for banks and financiers in general, especially in the short-termfinanciers in general, especially in the short-term

SME’s require medium to long-term financeSME’s require medium to long-term finance SME’s often need a long moratorium on the SME’s often need a long moratorium on the

repayment of credit facilitiesrepayment of credit facilities Borrowing from banks is often not the best Borrowing from banks is often not the best

method for SME’s to raise financemethod for SME’s to raise finance Many bank staff are not specifically trained in Many bank staff are not specifically trained in

SME financeSME finance 5

THE ROLE OF THE DIASPORATHE ROLE OF THE DIASPORA

An understanding of how SME’S have made An understanding of how SME’S have made progress in countries other than Nigeriaprogress in countries other than Nigeria

Can act as mentors to assist with the drafting of Can act as mentors to assist with the drafting of Business Plans, Budgets, Cash Flow Forecasts, Business Plans, Budgets, Cash Flow Forecasts, etc. etc.

May be willing to provide seed capitalMay be willing to provide seed capital Each year, Diaspora remits USA$45 billion back Each year, Diaspora remits USA$45 billion back

to Africato Africa Plays a key role in African developmentPlays a key role in African development Diaspora drives the transfer of intellectual Diaspora drives the transfer of intellectual

resource and creative business practices to Africaresource and creative business practices to Africa Diaspora has unique knowledge of business Diaspora has unique knowledge of business

environment on the Continentenvironment on the Continent Diaspora best equipped to change international Diaspora best equipped to change international

community’s perception of Africacommunity’s perception of Africa6

SOME OPPORTUNITIES FOR SOME OPPORTUNITIES FOR SME’SSME’S

Initiatives by some larger corporates to assist Initiatives by some larger corporates to assist SME’sSME’s• Ernst & Young – free consultancy service in some Ernst & Young – free consultancy service in some

emerging marketsemerging markets• Regcharles Finance & Capital Ltd., LagosRegcharles Finance & Capital Ltd., Lagos• AIA’s African Diaspora Fund – invests in SME’sAIA’s African Diaspora Fund – invests in SME’s• Jacana Partners – invests in SME’sJacana Partners – invests in SME’s• Nigerian banks more SME focused than Nigerian banks more SME focused than

previouslypreviously• SMEDANSMEDAN• Bank of IndustryBank of Industry• Crowdfunding – Funding CircleCrowdfunding – Funding Circle• Invoice financingInvoice financing• Venture Capital TrustsVenture Capital Trusts• Private equity generally better than debt for Private equity generally better than debt for

SME’sSME’s 7

Business Council for Business Council for AfricaAfricaWest & SouthernWest & Southern

To encourage business in Africa for the benefit of members and the sustainable economic development of the countries of Africa

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Membership•Multi-Nationals - Shell, Diageo, PZ Multi-Nationals - Shell, Diageo, PZ Cussons, BATCussons, BAT•SMEs SMEs •Consultants Consultants •NGO’sNGO’s•All sectorsAll sectors•Over 400 companies and Over 400 companies and entrepreneursentrepreneurs•Linked to the Eastern Africa Linked to the Eastern Africa AssociationAssociation•Linked to EBCAMLinked to EBCAM

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Membership BenefitsMembership Benefits

• Networking – investor briefings & Networking – investor briefings & networking networking • lunches - FCO, UKTI & DFIDlunches - FCO, UKTI & DFID• Influence and Lobbying – Influence and Lobbying – ECOWAS, NEPAD, SADC and at ECOWAS, NEPAD, SADC and at Ambassadorial Ambassadorial and Ministerial leveland Ministerial level• Discount Opportunities – hotels, Discount Opportunities – hotels, airlines, clubsairlines, clubs• Business Intelligence InformationBusiness Intelligence Information• Access to African and European Access to African and European NetworkNetwork

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ConclusionConclusion

Network with SME’s that have made itNetwork with SME’s that have made it NIDO, CANUK, BCA and others have NIDO, CANUK, BCA and others have

networks that can assist younetworks that can assist you Corruption is a choice, not a necessityCorruption is a choice, not a necessity Remember the risk / reward equation – Remember the risk / reward equation –

the greater the risks and challenges, the the greater the risks and challenges, the greater the rewardgreater the reward

No pain – no gain!No pain – no gain! Today’s SME is tomorrow’s DangoteToday’s SME is tomorrow’s Dangote Its who you know more than what you Its who you know more than what you

knowknow Develop a wide network of contactsDevelop a wide network of contacts If you are not known how can you be If you are not known how can you be

helped?helped?11

A partner in development across A partner in development across AfricaAfrica

Join our network – grow your businessJoin our network – grow your business

www.bcafrica.co.ukwww.bcafrica.co.uk12

If you’re not in Nigeria, you’re not in Africa !

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