GroFin, a multinational financial institution with offices in Lagos and Port Harcourt, recently organised a get-together in Ikeja to thank its customers and reward outstanding clients for the year 2018.
Welcoming the guests Dr. Felix Eze, investment director, Nigeria, said: “GroFin 2018 get-together is a platform for interaction between Grofin and our clients, our to-be clients, as well as our service providers. It is also designed to thank you for the opportunity you gave us to serve you. It enables us recognise some of our clients and service providers for distinguishing themselves in their conducts in the outgoing year.”
In his opening remarks, chairman on occasion, Mr. Ahmed Babatunde Popoola, MD, CLC Credit Bureau, explained the difference between GroFin and other players in the sector: “Other financial institutions go into customers that are already made, customers that are doing well. But the GroFin model is the other side, the other way round. They support entrepreneurs/startups, which is an uncommon financial niche. They put money in very risky areas.”
Popoola, who is also chairman of the board of GroFin, also spoke on the importance of debt in business: “What is the role of debt? I think some of us who have ever borrowed know why debt is so important. It is important in all aspects, in government, business, and even as for individuals.
“Why is debt important to business especially to the SMEs? It is important because you have ideas for expansion, but no money. And unless you get other people’s money to use, there’s no way you can realise that ambition/dream/mission. That mission remains dormant until you have access to financing. And, as a small businesses, you should not rely on getting everything from friends and relations. So, the option that is left to you is debt or the way out for you is through debt (borrowing). And so, it is not a bad thing to go into debt. And when you do debt, you can then expand, you can draw more people, you can make more production. That has spiral effect on the economy generally. And so I want to say that it is not bad to do that.
“The 2019 budget presented by the President and being considered by the National Assembly has about N1.6 trillion as debt component, which is about 24 per cent of the revenue we are expecting to fund the budget. Before now, up to this moment, government debt was around N19 trillion.
“Nigeria’s debt profile is just around N19 trillion and some people are saying it is just big. It is just about 17 per cent of our gross domestic product (GDP.) And the way they measure whether a country’s debt is too high is ‘what is the size of it to the GDP?’ Japan’s debt to GDP is 240 per cent, America’s debt to GDP is 104 per cent, South Africa is 60 per cent. So, most countries of the world leverage on debt if they want to transform their economy.”
Popoola, however, advised would-be borrowers to think well before going into borrowing to make sure it is put to good use so as to enhance their ability to pay back, as developments in technology have made it very easy for lenders to track beneficiaries anywhere under the globe.
“Now, my advice to all of us who take loans from GroFin and other banks and financial institutions: please, when you borrow, pay. Before you borrow, please, look at what you want to use the money for. Do a very good evaluation of what you are going to use the money for. And having taken the loan, please, pay.
“The era of banks lending in the dark is now over. Banks have access to very good information about you (borrowers) now that you do not even think they know. Sometimes, it is not about the loan that you have taken from a bank. Sometimes it is about not paying your electricity bill, or your telephone bill, sometimes it is about not paying the cooperatives you have taken money from, sometimes it is about even obtaining tickets from a travel agency and refusing to pay, etc. Banks now have all those information through the credit bureaus.
“So, before any financial institution will give you loan, they go to these bureaus to look for your information both as an individual and as business. When any of you fail to service your loan or claim you have forgotten, or think that you are smart, you will never be able to take any loan again. But if you are very good in repayment, that record will be there and next time you go for loan you will have the opportunity to get the loan with more liberal terms and conditions for repayment. That is the beauty of servicing your loan,” he said.
Guest speaker, Dr. Ezekiel Oseni, chief risk officer of the Bank of Industry (BoI) took the podium after Popoola. He enumerated everyday challenges faced by SMEs and advised them on what to do to make businesses attractive to lenders.
His words: “SMEs lack corporate governance and proper business records, absence of business plan from the beginning, except when they want to approach banks and other financial institutions for loans or financial assistance, poor funding, poor record-keeping, one-man or family business not eager to accept partners (partnership), etc, which make them high-risk ventures.
“Only 4.2 per cent of SMEs are able to access funding from formal banks. For more than 73 per cent of SMEs, funding is their major challenge. The money is there for them to access but because of the challenges enumerated, they are not able to access the money.
“De-risk your business (make your business attractive) by cutting out all or most of these obstacles so that you become attractive to lenders. Sound credit records of previous borrowing are very important,” Oseni said.
Gwen Abiola-Oloke, regional investment director, emphasised that GroFin’s business is mainly to nurture SMEs from infancy and stabilise them enough to be attractive to conventional lenders.
A number of clients were rewarded at the end of the day. They included Best Performing Client 2018 (Jim Pats Ltd), Most Compliant Client 2018 (Reels Pharmaceutical Ltd), Most Outstanding Service Provider 2018 (Araoti Chambers) and Most Outstanding Female Entrepreneur of 2018 (Sheba Centre Ltd, Mrs. Omolara Adelusi).