Micro, Small and Medium Enterprises can leverage growth opportunities to sustain their businesses in the post-COVID-19 pandemic era if they reinvent their business models, the Development Bank of Nigeria Plc has said.
This was part of the recommendations by panellists at the DBN Webinar session on the theme: “Alternative Financing Options for Sustainable Growth Post COVID-19 Lockdown”.
The DBN is a development finance institution established by the Federal Government in collaboration with global development partners to address major financing challenges facing MSMEs in Nigeria.
DBN functions by providing financial institutions, predominantly deposit-money banks, microfinance banks and other financial institutions, with funding facilities designed to meet the needs of MSMEs.
The session was part of a series to provide capacity-building and advisory services for MSMEs through digital platforms in the light of the prevalent economic impact of COVID-19 on businesses across the world.
The panellists included the immediate past President and Chief Executive Officer of Africa Finance Corporation, who is currently the CEO & Partner, South Bridge Group, Andrew Alli, and the CEO of Emerging Africa Capital, Toyin Sanni.
The session moderated by Chief Economist, Development Bank of Nigeria, Joseph Nnanna, also had the Head SME, FCMB, George Ogbonnaya, and the MD/CEO, Urban Shelter, Hajiya Sa’adiya Aliyu Aminu, as panellists.
Reviewing the current implications of the coronavirus pandemic on the Nigerian economy, the panellists noted that the MSMEs are the hardest hit by the crisis.
They blamed the situation on the limited access the MSMEs have to capital and having to depend on a few customer base.
Although they were optimistic this difficult phase would pass, the panellists said SMEs with innovative thinking and clear vision would be able to take advantage of the new normal situation.
“If you are an SME, the framework should be to survive the crisis period, have as much liquidity as you can and stem expenditure. You must stabilise the business by stabilising your cost and reconfiguring your operations,” they said.
For instance, they cited the example of a five-star hotel in Lagos that has outsourced its laundry and restaurant services and now gives its customers the benefit of ordering takeaways and pickup of their laundry.
The panellists noted that although the crisis would end, businesses would experience a lot of change as a result of the pandemic.
The AFC CEO, Mr Alli, said while businesses must prepare for the new era, they must be innovative, have a clear vision, and be ahead of the curve to take advantage of the new normal.
On alternative sources of funding for MSMEs, Head SME, FCMB, George Ogbonnaya said investors would be more frugal in the post-COVID-19 era and would only be attracted to businesses whose purpose aligns with strategic direction.
He listed alternative sources of funding for MSMEs to include crowdfunding, venture lending, data-driven lending platforms and risk-sharing guarantees.
The CEO of Emerging Africa Capital, Ms Sanni, on her part, admonished small business owners to ‘COVID-Proof’ their business.
She said quality and branded digital presence would stand as distinguishing factors in the present and post COVID-19 era.
“Quality and how you distinguish your brand from competitors will be very important. So, while saving as much as you can during this period, you should also invest in your brand and digitise your business.
Besides, she said MSMEs must redesign their businesses such that they were able to do an end-to-end client acquisition, provision of services, and monitoring and evaluation involving digital models.
For Sa’adiya Aliyu Aminu, being the major drivers, MSMEs would be crucial to reviving the Nigerian economy just like the sector did after the 2015 economic recession.
She called on the Federal Government to reaffirm the made-in-Nigeria policy to promote local production, patronage and curb capital flight after the pandemic.