ITRealms
Stakeholders
have agreed that absence of corporate governance is the major hindrance to
growth of Small and Medium Enterprises (SMEs) in Nigeria, reports ITRealms.
They said
that structure is a fundamental element of corporate governance that could
catapult start-ups to the next level of business ladder wherein they would be
able to attract funding as banks and equity investors are looking for scalable
businesses that could guarantee return on investment.
The Chief
Executive Officer, W-HBS Limited, a ManagementConsultancy firm that represents
organizations prominently in financial matters, LanreOniyitan, addressing a
gathering of start-ups, Thursday, at the quarterly SME Capacity Development
Forum organized by the Republic Media Limited in Lagos, decried inability of
start-ups which include kitchen and cottage businesses to build structures that
would serve as roadmap for their businesses.
ITRealms gathered she told the audience that
structure must include differentiating the business from the owner, having bank
account that bears the business name, business process/manual/systems that
define duties and keeps business going even in the absence of the owner, growth
plan, predictability of where the company will be in next 10 years.
She said it
is wrong to go to commercial banks for funding as start-ups because they have
not built enough structure. Banks, she said, are looking for companies that can
guarantee return on investment, saying that start-ups should organize
themselves into cooperatives to be able to attract fund especially from Bank of
Industry which could lend as much as half a billion Naira of SMEs.
She stressed
that for a company to access the fund it must be able to affect farmers and the
youth, adding that the Central Bank of Nigeria (CBN)guarantees its SME to the
tune of 50 per cent and expect the company to collaterize the rest 50 per cent.
As part of the
Corporate Governance, she told ITRealms that payroll must be consistent as investors
and lenders are equally after such details. She also said that in such fund one
must not ask for too much or too little, stressing that one must engage a
professional financial consultant to be able to package the vision of the
start-up to be able to access fund.
Speaking on
Alternative Security Market, Mohammed A. Mohammed , representing Nigerian Stock
Exchange (NSE) said the bane of SME include lack of corporate governance, poor
management , absence of visibility study, inexistent accounting system, lack of
business and succession plans.Other sources of hindrance to SME growth are
inconsistent government policy, lack of basic infrastructure, security and
accessing funds at cutthroat rates.
He also
spoke on the criteria for listing in the stock exchange and guide to
alternative finance which include approaching a Growth Ambassador who would
tell potential canditates that it is achievable, institutional service
providers, structuring the business into departments, staff structure, and a
turnover that is up to N50 million a year.
A
representative of AIICO Insurance, OlusolaAjayi stressed the importance of
insurance even as he advised start-ups to take up certain covers like fire and burglary,
good life, children education, pension for corporate risk management just as the
Managing Director, TFS Finance Limited, Mr. Eddie Osarenkoe, addressed the
issue of strategy in business.
The convener
of the Forum and Managing Director, The Republic Media Limited, Mr. Monday
Ashibogwu, told participants at the event with the theme “Tackling Challenges
with Emerging Opportunities” explored potentials in Small Business Funding, and
advised SMEs to buildfinancial inclusive business to be able to attract
funding.
Cyriacus
Nnaji/GEE
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