Question

financing a business venture has been considered a major challenge in nigeria identify and explain five sources of business financing available to entrepreneur

Answer 1

Available Sources of Funding for Startups in Nigeria

Here are leading players in the Nigerian business space who have records of aiding a large number of startups in recent years:

1.     Tony Elumelu Foundation (TEF): This is entrepreneurship program is funded by a $100million commitment by the Tony Elumelu Foundation to empower 10,000 African entrepreneurs over a 10-year period. The goal is to create at least 1million jobs and contribute over $10billion in revenue to the African economy.

Through its flagship Entrepreneurship Program, the Foundation empowers African entrepreneurs and the entrepreneurship ecosystem across 54 African countries. The Foundation has empowered 7,531 entrepreneurs thus far, through the provision of small business grants to qualifies persons and businesses.

It is arguably the largest source for small business grants in Nigeria.

2.    African Development Bank: The Nigeria Trust Fund (NTF) was created in 1976 by an agreement between the Bank Group and the Nigerian government. The NTF is a self-sustaining revolving fund. Its objective is to assist the development efforts of the Bank’s low-income regional member countries whose economic and social conditions and prospects require concessional financing. Its initial capital of $80 million was replenished in 1981 with $71 million. In 2008, the Federal Republic of Nigeria and the Bank Group agreed to a ten-year extension of the NTF. NTF resources can co-finance operations with the ADB and the ADF, as well as fund stand-alone operations, in both the public and the private sector. Supplementary loans for Bank Group financed projects can also be considered.

3.    Bank of Industry (BOI): Bank of Industry (BOI) is one of Nigeria’s principal financing institutions and it provides long-term support to different industries and various sectors of the economy. With the vision of providing financial support for the development of micro, small, medium and large businesses, BOI focuses on businesses that engage in manufacturing, processing, Oil and Gas, information technology amongst others. It is the largest and oldest financial institution in the nation.

4.    The African Women’s Development Fund (AWDF): This is a grant offering foundation that supports local, national, and regional women organizations, working towards the empowerment of African women and the promotion and actualization of their rights.

Their aim is to strengthen and support the work of African women organizations. By amplifying African women’s voices and achievements, AWDF supports efforts that fight hurtful stereotypes, and promote African women as active agents of change.

5.    Lagos State Employment Trust Fund (LSETF): This trust supports Small and Medium Enterprises (SMEs) with ₦25 billion. The fund is divided into two categories: micro and small businesses or the micro category. Businesses in this category can access up to ₦500, 000 loans with an interest rate of five percent and a tenure of one year – this is mainly geared towards youth entrepreneurship support.

The small business category businesses can get up to ₦5 million for a tenure of three years. The criteria for accessing the funds include: membership of a business organisation that will recommend the business for the loan, Lagos State tax receipt for at least six months, and Lagos state residency card. Till date, up to 8,000 businesses have received over ₦6 billion from LSETF.

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