Alternative Finance Limited (Obelix), Nigeria’s SEC-regulated Crowdfunding Intermediary, has announced that it has fundraised N100 million from 9,324 registered small-ticket retail investors for three promising small and medium enterprises in just 10 days.
This successfully pioneered an alternative way of raising badly-needed cash for SMEs operating in Nigeria.
According to statement by the media office of the company, the investors were wholly from its waitlist of 42,545 early adopters. The average investment in the Private Notes was N10,725 with the smallest and biggest tickets being N1,200 and N20,000 respectively.
The statement reads “ the longest duration of the new asset class for individual investors is 90 days, with a fixed rate of 12 per annum.
“Formal SMEs number 40 million in Nigeria, contribute 84 per cent of total employment, 45 per cent of GDP but just eight per cent of exports and tax collections by the Federal Inland Revenue Service (FIRS) according to a recent joint report by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS).
“A total of 15 eligible applications to raise funds were considered by the company’s Screening Committee but only three of the SMEs were accepted by Obelix to utilise monieworx®, its registered Funding Portal, to embark on their crowdfunding campaigns.
“All the fundraisers have a good corporate governance record and are SMEDAN-registered. The 3 most promising small and medium enterprises that have their securities offerings hosted are, namely: Imose Technologies Limited, Alatiron Nigeria Limited and Q21 Solutions Limited.
“According to a Formal MSME Finance Gap in Developing Countries report by the World Bank, the unmet financing needs of Nigeria’s formal SMEs is estimated at US$22 billion yearly.
context, total banking loans was US$66 billion as of December 31, 2022, giving SME loans an eight per cent share of the loan book.
“The risk in this sub-sector is priced in the range of 28 per cent to 35 per cent p.a. Gaining access to finance is by far the biggest constraint to SME growth. Over 70 per cent of the 40 million SMEs cited a lack of finance and access to financing as the main constraint to their business growth.
“Access to advisory services and access to markets weighed in at a distant second and third. According to the Credit Bureau Association of Nigeria (CBAN), only four percent of the 40 million SMEs have access to credit from Nigerian banks. 80% of new SMEs in Nigeria thus die before their fifth year.
Obelix was able to onboard 42,545 users on monieworx®, over a 12-month period, through a combination of extensive community engagements to build a suitable “banking replacement”, and the first-of-its-kind early access programme (EAP) that nudges users to join a community or a group.
