Adequate financing is the fuel that propels any business, providing the necessary resources to develop products, execute marketing strategies and sustain initial operations.
Without a robust financial foundation, even the most ingenious business ideas can struggle to gain traction and achieve long-term success.
Seed capital and finance for kick-starting a business and expansion is becoming increasingly challenging for companies to locate, especially in Africa’s most populous nation.
The country’s challenging business environment deters commercial banks from lending to businesses without collateral, which many entrepreneurs cannot provide.
Read also: MSMEs need tailored funding to fuel growth
Meanwhile, informal lenders, though not demanding collateral, impose exorbitant interest rates that stifle growth and collapse businesses, especially with the monetary policy rate (MPR) at 27.25 percent.
Understanding the critical importance of funding to Nigerian business owners and entrepreneurs, Start-Up Digest, in its characteristic manner, has dug up some of the places where entrepreneurs can access funds for their businesses.
There are general criteria to access these funds and there are also specific ones depending on the particular funding institution.
General criteria
The general criterion for accessing these funds is to have a business. These firms rarely fund ideas because ideas are untested and untried.
You must have a business and ensure that it is providing a solution to a problem in society.
Next is to have a bankable and viable business plan. More so, the entrepreneur should be clear on where he/she wants to be in the near future and be able to describe the market he/she plays.
The entrepreneur should have good book-keeping to accurately know his/her revenue and expenditure.
And in no particular order, here are some funding options for entrepreneurs and startups this year:
Grants
Grants are essentially free money provided by government agencies, nonprofits and private organisations.
They do not need to be repaid, making them highly attractive. However, they are often competitive and have stringent eligibility criteria and application processes.
Securing a grant requires meticulous preparation. Entrepreneurs will need a compelling business proposal, detailed financial projections and sometimes even letters of support from community leaders or industry experts.
Finding the right grant can be challenging, but several reputable websites can simplify the search.
National Credit Guarantee System (NCGS)
President Bola Tinubu during his New Year address to the nation on 1st of January announced the creation of the National Credit Guarantee System to support small businesses.
The National Credit Guarantee System serves as a cosigner for loans, providing partial guarantees to lenders in case borrowers default.
It’s not a handout but a handshake, a signal to financial institutions that the government stands behind its MSMEs.
This model has proven its mettle in countries like South Korea, Malaysia, and Chile, where credit guarantees have transformed access to finance into an economic growth engine.
It is expected to kick-start operations by the end of the second quarter of 2025.
Read also: How efficient policies can drive Nigerian MSMEs
Tony Elumelu Foundation Fund
The Tony Elumelu Foundation (TEF), Africa’s leading philanthropy has empowered thousands of entrepreneurs across 54 African countries with seed funds.
A few years ago, Elumelu set aside $100 million for African entrepreneurs. If you are in agriculture, fashion and design, light manufacturing, ICT, and solid minerals, among others, then you may apply for the ongoing Tony Elumelu Fund.
You can be one of the 1,000 lucky entrepreneurs to be shortlisted for 2025 as the application is currently ongoing. Applications are expected to be submitted through TEF’s proprietary digital hub, TEFConnect, and the application period is January 1 to March 1, 2025.
Jack Ma Africa’s Business Heroes
Africa’s Business Heroes (ABH) is the Jack Ma Foundation’s flagship philanthropic program in Africa to support entrepreneurs. Our mission is to showcase and grow local talent who are creating a positive impact in their communities and inspire a movement of African entrepreneurship.
The program is open to entrepreneurs from all 54 African countries and will see the top 10 finalists share the $1.5 million grant money yearly.
It is a 10-year programme that will recognize 100 African entrepreneurs and provide grant funding, training programs, and broader support for the broad African entrepreneurial ecosystem.
It funds an enormous diversity of businesses with sixteen different sectors including agriculture, beauty & wellness, construction, consulting, education, energy, environmental protection, financial services, F&B, healthcare, ICT, logistics, manufacturing, media & entertainment, retail, and transportation.
So, are you operating in any of those sectors, and then you may apply for Jack Ma Africa’s Business Heroes Programme. The application opens in April and closes in June yearly.
Crowdfunding
Over the years, crowdfunding has become an effective alternative for entrepreneurs to raise funds for their business ideas.
It is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the Internet.
It is initiated by some organisations or people to support a broad array of activities such as journalism, disaster relief, political campaigns, start-up funding, movie development, support of artists by fans, and scientific research amongst others.
Though its knowledge is still low amongst Nigeria’s start-ups, some entrepreneurs are already taking advantage of it to raise funds for their businesses.
Some of the popular crowdfunding websites entrepreneurs can raise funds from are: Kickstarter, RocketHub, Indiegogo, GoFundMe, Crowdfunder and Wefunder among others.
Read also: Ogun boosts MSMEs, empowers people living with disabilities
Incubators & Accelerators
Early-stage businesses can consider Incubator and Accelerator programs as a funding option. Found in almost every major city, these programs assist hundreds of startup businesses every year.
Though used interchangeably, there are few fundamental differences between the two terms. Incubators are like parents to a child, who nurture the business by providing shelter, tools, training and network.
Accelerator is more or less the same thing, but it helps to run/take a giant leap. These programs normally run for four – eight months and require a time commitment from the business owners. You will also be able to make good connections with mentors, investors and other fellow startups using this platform.
Incubators and Accelerators hub to access are Co-creation, Wennovation, Passion Incubator, Leadpath Nigeria and StartupSouth among others.
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