If you are running a micro, small or medium business in Lagos and you need money for expansion, ask Akintunde Oyebode.
Oyebode is the chief executive officer and executive secretary of the Lagos State Employment Trust Fund (LSETF), which was set up by Governor Akinwunmi Ambode to lift businesses and unemployed residents of the state.
Two years into the office, Oyebode has shown that state of origin, tribe or race does not matter to him. As long as you have a business in Lagos and meet the loan requirements, Oyebode and his team will ensure you get funding.
So far, 5,800 businesses have got approximately N4.9 billion from LSETF. He believes that by end of March this year, the number of businesses that have accessed loans will have been raised to 8,000. This number will have hit 15,000 by the end of the year.
How does it feel to superintend such revolution in Lagos?
“It is incredibly fulfilling for me to see small businesses get access to funding without bias, without nepotism, without nepotism.
“It has been superb and exciting. We have been able to support thousands of businesses, so it is rewarding and fulfilling to see a lot of our work starting to show signs of delivering some value,” he tells Start-Up Digest in an exclusive interview.
What exactly are Oyebode and his team looking for in a loan applicant?
“We are looking for credibility. We are looking for those who have not misrepresented their performance. We are looking for clarity; people who know exactly what they are using the loan for, without inflating the cost of goods or services they want to pay for,” he explains.
“We are looking for people who can repay their loans; people who can show that if they get the loans, they have a clear way of paying back. We are looking for people who, when we go and do credit checks, they have not been owing banks without repaying; they have not issued bounced cheques or lied about where they live or the size of their businesses. If you are selling 20 loaves of bread a day, you have not told us you sell 200 loaves,” he further explains.
The executive secretary says the LSETF verifies all the claims of applicants and does not necessarily make impossible demands.
“We are not asking anybody to bring their grandmother’s hair or for a collateral, but we are asking for integrity. This is tax payers’ funded project, so we need to show we are looking at the right things to ensure we get value from it,” he says.
The LSETF does not just give out loans without providing capacity development.
In affiliation with the United Nations Development Programme (UNDP), the LSETF trains 10,000 Lagosians under the Employability Support Project.
The agency has already trained 600 people and will add 10,000 more by the end of 2018.
It has also launched Lagos Innovate, which is designed to support innovation and tech start-ups in Lagos. Two programmes have also been launched and another—an accelerator programme—will be launched in April this year.
“For the loan programme, we train you after we give you an offer letter. And that is a compulsory bootcamp to ensure you know how to run a business. But for our employability programme, we are training and placing people in jobs. We have gone to the industry and asked, ‘What jobs do you have skills-gap and struggling to fill?’ We are training people and placing them on those jobs. We are also giving people the opportunity of getting jobs. It is not a guarantee that you will get jobs but we try to provide jobs for them at the completion of training,” he elucidates.
The LSETF is targeted at creating more and more jobs. The institution monitors, evaluates and periodically tracks job creation. But how does it ensure that people who get loans actually create jobs?
“We track how they are putting people in the tax register. So it is not just enough for you to say you are employing people. Are they paying taxes? What kind of jobs are they doing? So we have an independent business development partner who will go in there to understand what is going on. But we also have the tax register to validate what we get. Monitoring and evaluation are critical parts of our programme. Without it, it is difficult to understand what is working, what is not working, what should be stopped” he says.
Already loan beneficiaries have created 8,000 jobs and there will have been more by April/May when the majority of the loans will have been returned.
Oyebode says that the LSETF also supports start-ups but pays more attention to existing businesses, which are the mainstay of the economy.
He advises that when starting a business, it is not proper to get a loan because it has conditions and commitment of repayment, pointing out that the best bet is equity.
“But we still support start-ups but not in excess of N250,000. That is the maximum loan and that just reflects the risk nature of start-up businesses. But if you then succeed with the N250,000 and you pay that back as and when due, we can them move you up to a higher loan of up to N500,000 or N5 million,” he discloses.
He says that trade and service players are topping the chart of loan beneficiaries due to the nature of the Lagos economy.
However, he adds that his agency has funded schools, film makers, DJs, photographers, beauty and ICT payers, among many others.
Oyeode hopes to increase the loan book from N4.9 billion today to N10 billion by the end of 2018, but he says that the funding is insufficient in relation to demands.
“We can do more if we receive donations from well-meaning institutions and individuals. The numbers I am giving you is based on the funding we expect to receive from the state. We call on well-meaning institutions and individuals who want to solve the job situation in Lagos to partner with us. With our funding and yours, we can go a little bit further than if we are in this journey alone,” he says.
Compare the number of people seeking loans with number who get loans and you get 25 percent.
This is a function of the capital the agency has available and a reflection of the readiness of businesses, he says.
“To be fair, of the businesses we say ‘no’ to, half of them are not in any way ready to take loans. They haven’t shown the required readiness; their documentation does not suggest that they can pay back their loans,” he reveals.
The good news is that those who are taking loans are repaying them, which is why repayment rate today is over 90 percent.
The LSETF is N25 billion over a four-year period. The executive director believes that with what is being put on ground, the funding would outlive the Ambode-led administration.
He further says that the two-year journey of the LSETF has been outstanding.
“I think it is a great start and a reminder that there is a lot more to do. It is a reminder of what possibilities are if we do things correctly. Even in such a short period, we are getting some very good testimonies about how these funds have helped them. If we do 10 times what we are doing today, the impact on the Lagos economy will be tremendous. That is what I always share with my team, that if we have done this little and got some feedback, imagine if we do five, 10 times, what the impact on Lagos economy will be.”
Oyebode was head of SMEs at Stanbic IBTC. Start-Up Digest asks him to compare his experience then and now.
“They are both rewarding experiences. When I was working in Stanbic IBTC, we pioneered unsecured lending in the SME space, and I found it rewarding going round the country, listening to people tell me how the funding we were giving them were making them significantly grow their businesses. I am now working for the government. It is also incredibly rewarding to hear people across Lagos tell us how these funds have changed their lives. I think the big difference between my previous job and now is that in this role, we are allowed to finance start-ups and we provide the loans at the concessionary rate of five percent, which means that it is likely to be more impactful,” he explains.
The executive secretary feels that the challenge he faces at the moment is normal.
“I think the biggest challenge we have faced is just the normal challenge of setting up a new enterprise, ensuring that we could hire the right people and ensuring we get the word out there, that this loan is available. It has been very fulfilling, but it has fewer challenges than I had earlier expected. It is a testament of the work of the board led by Ifueko Omoigui Okaru, who helped us set the exceptional governance framework, and also to the praise of the governor who followed through this vision of setting up this funding it appropriately. Despite a difficult economic condition, even when the economy was in recession, the governor was able to find funding for us. I think he deserves some credit,” he states.
He likewise commends the work of the Presidential Enabling Business Environment Council (PEBEC), whose landmark has impacted Lagos.
Oyebode believes that funding is a big challenge facing entrepreneurs, but not necessarily the biggest.
“It is one of the biggest problems because they are also trying to solve other problems. They are also trying to get new markets, and expand access to markets. It is one thing to get capital but another thing to sell your goods and services,” he says.
ODINAKA ANUDU
