Teju Abisoye is the acting executive secretary of the Lagos State Employment Trust Fund (LSETF), which focuses on delivering programmes targeted at tackling unemployment.
The LSETF programmes are structured to provide financing for the micro, small and medium enterprises (MSMEs), skills development for youths and support for innovation in technology-driven enterprises. Abisoye is a lawyer with over 14 years’ experience and also an alumna of Yale’s Women Leadership Programme.
She is focused on getting results and ensuring that unemployment rate declines dramatically in Nigeria’s commercial capital, Lagos.
The LSETF has three different types of funding support. One is called the Micro Enterprise Startup, which entitles start-ups to access up to N250, 000. The second one is the Micro Enterprise Owners, which is focused on businesses existing up to 12 months. Applicants can access up to N500, 000. The third one is called Small and Medium Enterprise Owners, which is for small businesses that are formalised and have existed for over 12 months. Applicants can access up to N5 million.
The funds require that you live and do business in Lagos and have the Lagos State Residents Registration Agency (LASRRA) registration and at least one guarantor.
So far, the LSETF has disbursed N7.3 billion to over 11,000 businesses that have created about 100,000 direct and indirect jobs.
“What we do is to tackle unemployment,” Abisoye tells Start-Up Digest in an interview.
“First, small businesses provide the jobs. In Nigeria, 85 percent of the jobs are actually provided by the MSMEs, and not the large corporates. So we asked, ‘How do we ensure that we use MSMEs to galvanise job creation?’ One of those ways is them having access to affordable finance, with the hope that they will expand and create more jobs. That is the strategic reason behind intervening in the MSME space,” she explains.
The LSETF does not just give out loans to beneficiaries, but also provides them with capacity development so that they can run successful and sustainable businesses.
Abisoye says that the LSEFT also provides access to markets, promotions, and advisory services such as legal, accounting, HR and other things that can help the businesses to scale and employ more people.
“And we actually see that it has been an impact area,” she says.
“At the end of 2018, we collected an impact assessment. As of then, we had disbursed loans over 24 months. We had supported over 7,000 businesses and disbursed over N6 billion at that time. Together, those businesses had created about 92,000 jobs directly and indirectly. As of today, we have disbursed N7.3 billion to over 11,000 businesses. We are now talking about 100,000 jobs created directly and indirectly. That is the reason we are in that space,” she further says.
The LSETF tracks the jobs that its beneficiaries create. Initially, the government agency would send out business development service providers (BDSPs) who would meet these beneficiaries, discuss their challenges and collect job data for LSETF each month. However, the agency now carries out this exercise every 24 months to avoid interrupting the businesses of the beneficiaries.
“When we are looking at job creation, we are not just looking at how many jobs you have created,” she notes.
“We are looking at how the fund has impacted the beneficiaries, their communities and their own immediate environment? How many dependants have they been able to support? That is the impact we are looking at,” she further notes.
The LSETF lends at a single digit rate of five percent and the tenor of funds can extend up to 36 months depending on the use.
“You can access up to N5 million for 36 months. It depends on use of the funds. Are you buying equipment that will take time to install? We would understand you need a moratorium if that is the case. But the tenor varies,” she discloses.
Many Nigerian banks do not lend to small businesses for fear that they may run to Canada with their money. For the LSETF, many measures have been put in place to ensure that MSMEs return the money conformably.
“What we do to the best of our ability is due diligence regarding the promoter and use of funds,” Abisoye says.
“We will continue to do our due diligence not just on the beneficiary but also on the guarantor. If we do our due diligence right, we will be able to limit the number of beneficiaries that are non-performing,” she notes.
The agency’s non-performing loans (NPLs) is around 14 percent at the end of 2019.
“And that is because we use International Public Sector Accounting Standards (IPSAS). This says a loan is bad one day past due. Banks use different standards and most times they say loans are bad once they are past 150 days or so,” she explains.
“We had a pilot stage where we were learning on the market. Today, we understand that there are some local governments that you do not touch when it comes to credit. We learnt it the hard way. It has gone better at the moment. In terms of recovery, when people see you are serious about collecting your money, they will pay you back. What we experience is that people renegotiate. Instead of ending the loans this month, we give them six more months. Now, we are taking them to court and reporting them to the Credit Bureau. If you are a serious business, you will realise that you can’t move forward until you pay the LSETF loans,” she warns.
She explains that banks do not like lending to MSMEs because a lot of them are not formalised.
She says some of them never operate bank accounts and do not have formal registrations at the Corporate Affairs Commission (CAC).
“If you go through our programme for 12 months, for you to be able to renew, your business must have been formalised. You now run bank accounts and we will have that record because you pay through your bank.”
She reveals that the LSETF has a current capital of N11.1 billion from the government and grants that it has raised from the market.
“Apart from the lending programmes, we also do other programmes such as Employability, which is now Skills for Jobs,” she says.
The LSETF boss insists that Nigerian education institutions must tailor education to the needs of the market. According to her, the country’s focus should shift away from certificates and popular courses to education that is relevant.
“We have to look at what is relevant for the future and what is required in the market. We are churning out hundreds and thousands of lawyers every year, but is that what the market needs? If we churn out one million marketers, can the market absorb them?” she asks.
“That is what I think education should be. It is not just about registering universities. It should no longer be ‘I want to study Law because my father is a lawyer.’ And it is about what is required in the market. People talk about soft skills being a challenge with a lot of new graduates, but how are we ensuring that the skills are incorporated in training graduates. Let us cut everything else and focus on that as much as possible. That way, you are able to empower the people,” she advises.
The LSETF has a programme known as Employability Support Project, which is aimed at helping young Nigerians gain relevant skills in order to enable them become employable. It is done with the support of the United Nations Development Programme (UNDP).
Abisoye explains that the programme focuses on demand and market approach.
“We look at the skills the market wants, and how to get people and put them in those jobs. So we started with construction, health care, tourism and hospitality, as well as garment construction. There are other areas that are relevant such as the front office management, document assistance and others. The programme takes what is relevant in the market. We make sure we train people to take those jobs,” she says.
She adds that the agency is working with GIZ on Migrants, Returnees and Potential Migrants Programme, where the right skills are given to young people who are either returnees or potential migrants.
“We signed an agreement with the United States African Development Foundation, where we work to provide the right skills and ensure people get the skills. As much as possible, 70 percent is practical, 20 percent is the soft skills and the rest is the theory. That is how every of our programme is divided,” she says.
“One of the things we are doing is the Dual Vocational Training. As you are training, you are attached to a company. You will do 70 percent in a company and 30 percent in a training school. Companies get to know you. We have trained over 5,000 people. More than 50 percent are in sustainable jobs either as employees or starting their own business. We continue to seek avenues to ensure that placements continue to improve,” she assures.
Abisoye and her team are happy that they are part of success stories of many business owners in Nigeria.
“When companies tell their stories about their successes and they tell how LSETF was part of that, you feel happy that you are part of this journey. When they tell you they were able to raise equities in hundreds of dollars; when they say they started with six employees but now are 30, you feel happy about being part of their journey,” she says, adding that LSETF has reduced unemployment in Lagos by 6 percent.
But she acknowledges that the LSETF is just scratching the surface, calling on partners to join them in creating the change the country so desperately desires.
“I have thoroughly enjoyed the terrain. We want to get results,” she adds.
On Feb 5 and 6 in Lagos, LSETF will join other states and stakeholders who would wish to replicate its model in their domains.
“One of the ways to get results is to get other states and other stakeholders to see how model has worked so far in Lagos. We think the summit is an opportunity to network and get a lot of feedbacks about our programme,” she concludes.
