The Bank of Industry was set up to provide financial and business support services to the country’s industrial sector. The bank targets sub-sectors like agricultural and agro-allied businesses, solid minerals, oil and gas, manufacturing, among others.
Despite this clear-cut objective of the bank, there seems to be a huge information gap between Nigerians and what the bank is doing.
In this interview with Godwin Anyebe, Group Head, Agrobusiness and FMCG, BOI Investment and Trust Company, Victoria Modedor speaks on the services the bank provides to SMEs; the challenges the sector is facing; and what is being done to help tackle them.
Godwin Anyebe: What are the services you offer to SMEs in Nigeria?
Victoria Modedor: Basically, what we do is provide advisory service to SMEs so that they can learn the best ways to source and manage funds. However, in the course of doing this, we discovered that there is a huge disconnect between expectations and reality on the ground. The fact that I am a financial institution, does not mean I am targeting everybody. People need to understand that, if you are going into agriculture, in terms of planting, poultry, among others, the Bank of Agriculture should be your target. And, if you are going into export, you should approach NEXIM. It is only when you are into processing that it becomes our business.
Godwin Anyebe: It appears there is a huge knowledge gap within the system, what are you doing to bridge this gap?
Victoria Modedor: Yes there is and it is a serious issue for us. For instance, a lot of people have products and they don’t know the channels or contacts they can sell those products. But as we connect people and allow them to tell their stories, you gradually bridge the gap. We feel it was important to tell the stories that people go through. Let us connect them with their target market, and while doing the connection, it takes only intentional willpower to push through.
Godwin Anyebe: What are some of the ways you used in connecting them?
Victoria Modedor: we use the power of social media to include SMEs in our narrative. We also put all those in the same sector in one group. We have several groups. We believe unless we promote their stories and make them an important part of the ecosystem, we will continue to have an underdeveloped sector. Nigeria is our country and we must be the ones to make it work, and it starts from me and you, as consumers, investors, practitioners, and researchers.
Godwin Anyebe: Can you kindly provide an insight into your youth entrepreneurship support?
Victoria Modedor: The Youth Entrepreneurship Support (YES) Programme is BOI’s effort at addressing the worrisome phenomenon of youth unemployment in Nigeria by building the capacity of the youths and funding their business ideas. The YES programme is aimed at equipping young people with the requisite skills and knowledge to be self-employed by starting and managing their businesses.
According to a 2013 survey by the Nigerian Institute of Social and Economic Research (NISER), most of the capacity building programmes aimed at addressing youth unemployment, have concentrated more on training without any tie-in to the provision of small business loans, which is a critical success factor to the establishment of small businesses.
In addition, they hardly take care of the entire training value chain in terms of Entrepreneurship, Business Management, and Technical Skills.
BOI’s approach to tackling the youth capacity building challenge is to focus on young aspiring entrepreneurs within the age bracket of 18 – 35 years that have viable business ideas by developing a Product Program – Youth Enterprise Support Programme — for empowering them. This crop of Nigerians forms a significant proportion of unemployed youth in the country.
Godwin Anyebe: Is farming part of this programme? Until recently, many Nigerians did not see farming as a viable venture. Is BOI doing anything to change this narrative?
Victoria Modedor: Yes. Before this period, we were not celebrating farmers. Why do we keep projecting them as poor, dirty, and unlearned? These are some of the questions we asked ourselves. And we realised that there is a gradual shift from the illiterate farmer to the literate farmer, what happened to that gradual shift? Why are we not telling that story? Why are we not seeing that connectivity? That was what caught the interest of the Bank of Industry in the value chain. What the media often talked about is sad news, because they say, sad news sells.
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But there is also good news that can be sold about farmers, and if you cannot put in positive energy, you cannot attract investors. While telling their stories, we also let them understand that farming is not like milk and honey. There is a gestational period and they must be intentional about it. They must know their market before starting a farming business. They must connect with their market, connect with their vendors, connect with their clients, and connect with their partners.
Godwin Anyebe: How do you measure the impact of what BOI is doing with SMEs?
Victoria Modedor: We look at the numbers. With our activities here, what I have seen is that more young people are now interested in SMEs. They have seen that you don’t need so much money to start, you just need to start. And starting small does not mean that, you will remain small. Because there is this fear that for you to make it in business you must start big. But with people sharing their knowledge through various platforms, people are always motivated to start a business, no matter how small.
Oftentimes, people started from the point where if they fail in their investment, it doesn’t discourage them from moving forward. It’s all about learning from their mistakes and moving on. People also learn from others’ mistakes. For instance, some people who are into poultry farming said, they started from selling the product first, to understand the market before going into poultry farming because they don’t want to do it the same way others did. When there is any crisis in the market, they can weather the storm. Because they understood how each step works.
That is why we encourage young people to join our training programs. We have experts who train entrepreneurs on how to push successfully in business. We are also encouraging them to embrace technology. Africans are doing things in the tech space that are unique to the African mindset.
Godwin Anyebe: Talking about technology, what has BOI done to support the youth in that aspect?
Victoria Modedor: The Bank of Industry is establishing tech hubs to address the high level of youth unemployment currently estimated at 33.3 percent. The bank would be sponsoring tech hubs in recognition of the talented youths in universities and the need to channel youths to more productive and impactful initiatives rather than social vices. The bank remains committed to providing funding to support credible and bankable ideas that emerge from the tech hubs to enable them start operations and scale into viable businesses.
For BOI, embracing technology and infusing it into business processes will make organisations and the country more competitive. We also understand that, the tech industry can be a major pillar of a diversified economy. It can create exciting jobs that encourage our young people to stay in Nigeria even as they work and compete globally. BOI is happy to support technology because it aligns with our mission to transform Nigeria’s industrial sector.
Godwin Anyebe: Please share some of your challenges with us and how you are tackling them?
Victoria Modedor: Our challenges are numerous. For instance, you will see someone that has been doing business for many years and such a person does not have a business name; does not have a business account; does not pay tax; does not have a tax identification number (TIN).
Let us assume the person does not want to pay tax. Let the person start from having a TIN. Because we must align with the government and their policies to access their money.
Unfortunately, until we have a database where we can locate this set of business people and deploy intervention to them, we will be in a vicious circle. Not that there is no data concerning SMEs at the moment, but there is no central database.
For our current interventions, we need to carry out studies to get the data and validate our points before carrying out the intervention. About 50% of the money earmarked for the interventions is spent on studies and research. But if this information is available in a central database, all we would do is take them, analyse them and take decisions