- Title: Soft loan firms seek to close credit gap for Nigerian entrepreneurs
- Date: 9th November 2018
- Summary: LAGOS, NIGERIA (RECENT) (REUTERS) MAN CUTTING RIBBON DURING THE RESTAURANT OPENING CEREMONY/PEOPLE CHEERING MAN SPEAKING TO CROWD VARIOUS OF FOUNDERS OF NEW RESTAURANT VARIOUS OF BANNER READING 'SPEEDMEALS MOBILE KITCHEN' VARIOUS OF RESTAURANT FACILITIES (SOUNDBITE) (English) AFAMEFUNA IGWE, ENTREPRENEUR SAYING: "It was difficult. We have a bank we have been banking with, a commercial bank we've been with them for over eight years and when we got this place we had paid money to finish up the renovation. We went to our bank and said can you lend us just 1 million naira (2,700 USD) or 2 million naira (5,000 USD). They said no, you have to go and get collateral and so on and so forth. We were so confused and we've been with you for how many years and we are qualified in terms of our turnover but because we don't have collateral to bring you can't give us money." WALL ART WITH INSCRIPTION READING 'LOANS' PEOPLE WAITING AT RENMONEY OFFICE MAN LOOKING ON MAN HOLDING HIS LOAN APPLICATION FORM VARIOUS OF RENMONEY REPRESENTATIVE ATTENDING TO CUSTOMER CUSTOMER FILLING THE APPLICATION FORM VARIOUS OF CHIEF EXECUTIVE OFFICER, RENMONEY, OLUWATOBI BOSHORO TALKING WITH EMPLOYEES (SOUNDBITE) (English) CHIEF EXECUTIVE OFFICER, RENMONEY, OLUWATOBI BOSHORO, SAYING: "This market is high risk and that's one of the reasons why you find a lot of entities or companies running in this part of the business. But we have taken this challenge on and we put in place the kind of processes that ensure that as responsible lenders we lend properly so that we get the right returns and so we are putting data scientists who look at the data on a broad scale and are able to make the right decisions concerning the customers. We have alternate sources of information, we are plugged into several data bases across the country, verified databases that give us information about the customer and so we are able to make the right decisions concerning our customers." WINE GLASSES ON A TABLE BARTENDER FOOD ON PLATE WOMAN EATING FINGER FOOD
- Embargoed: 23rd November 2018 09:51
- Keywords: cash and carry economy bank loans carrying debt startups in Lagos Nigerian economy Speedmeals Mobile Kitchen small entrepreneurs
- Location: LAGOS, NIGERIA
- City: LAGOS, NIGERIA
- Country: Nigeria
- Topics: Economic Events
- Reuters ID: LVA00195SAKWN
- Aspect Ratio: 16:9
- Story Text: The Igwe twins and friends celebrate the unveiling of their new restaurant, Speedmeals Mobile Kitchen in Nigeria's commercial capital Lagos.
The brothers always dreamt of owning their own business but struggled to find a start-up loan.
Their predicament is common: around 80 percent of sub-Saharan adults have no bank accounts and struggle to access finance from banks reluctant to lend to new customers, especially small entrepreneurs for whom they have no history.
In Nigeria, applications for bank credit loans requires proof of land ownership, treasury bills or bonds.
In order for the Igwe brothers to qualify for a bank loan of one million naira (2,700 USD), they would need a treasury bill valued at four million naira (10,000 USD).
"It was difficult. We have a bank we have been banking with, a commercial bank we've been with them for over eight years and when we got this place we had paid money to finish up the renovation. We went to our bank and said can you lend us just one million naira or two million naira (5,000 USD). They said no, you have to go and get collateral and so on and so forth. We were so confused and we've been with you for how many years and we are qualified in terms of our turnover but because we don't have collateral to bring you can't give us money," said one of the brothers, Afamefuna Igwe.
The brothers' solution came in the form of Renmoney, a Nigerian microfinance bank that offers collateral-free cash loans of up to four million naira.
Through Renmoney, the Igwe bothers managed to secure a loan with no collateral and an agreement to repay on a nine-month basis at a 40 percent interest rate.
"This market is high risk and that's one of the reasons why you find a lot of entities or companies running in this part of the business. But we have taken this challenge on and we put in place the kind of processes that ensure that as responsible lenders we lend properly so that we get the right returns and so we are putting data scientists who look at the data on a broad scale and are able to make the right decisions concerning the customers. We have alternate sources of information, we are plugged into several databases across the country, verified databases that give us information about the customer and so we are able to make the right decisions concerning our customers," said Renmoney Chief Executive Officer Oluwatobi Boshoro.
But the road remains long for entrepreneurs like the Igwe brothers.
Nigeria is one of the toughest countries in which to operate and local and foreign business leaders have long complained that red tape, mismanagement and corruption make it difficult to do business in Africa's largest economy. - Copyright Holder: REUTERS
- Copyright Notice: (c) Copyright Thomson Reuters 2018. Open For Restrictions - http://about.reuters.com/fulllegal.asp
- Usage Terms/Restrictions: None