•Says without stable currency, it will be very difficult to attract FDI which is vital for economic growth

For over 15 years the name Akinsanmi Lajuwomi was ringing a bell in the United Kingdom where the man worked with many blue-chip companies.

But, despite his success as a business and technology consultant in the United Kingdom in key roles for blue chip organisations such as Sky Group (owners of Sky Sports), Discovery Channel and Daily Mail group, Lajuwomi took the decision to return to Nigeria and kick-start his dream business in the area of growing medium, small and micro enterprises, not minding the teething challenges ahead of him.

After pitching his tent in the Nigerian business environment under the brand name of Winock Lending Limited for some years, Lajuwomi can now be described as one of the leading voices in the area of business and economic development in Nigeria.

In this interview with Northern Region Editor, Soni Daniel and Ethel Igboeche, Lajuwomi speaks authoritatively on what Nigeria needs to do to grow the economy and reduce poverty for the overall interest of Nigerians. Excerpts:

WHY did you choose to leave the UK for Nigeria at a time many are going the other way, and immediately venture into micro investments instead of pitching your tent with one of the blue chips where you once worked in the United Kingdom?

We choose to invest in micro ventures instead of blue chips for three reasons: In Nigeria, there are more micro ventures than blue chip companies. Nigeria Bureau of Statistics, NBS, survey conducted in 2017 revealed that there are 41.5 million MSMEs in Nigeria, and 99.8 percent of these are micro ventures. So, Winock is targeting a large and viable market segment by focusing on micro ventures. Secondly, even though MSMEs account for 86 per cent of employment and 48 per cent of GDP, they unfortunately have only four per cent access to credit finance compared to blue chip companies. We are increasing access to credit finance for micro ventures so that they can continue to add value to the Nigerian economy.

Thirdly, if you study the history of blue chips such as Dangote, Globacom, Heirs Holdings, Apple, Tesla, and Amazon, you will observe that they all started off as micro ventures and grew to become blue chips mainly because of access to sustainable finance. Inevitably, some of the micro ventures that we are supporting will grow to become blue chips and compete globally. 

To what extent has your company assisted Nigerian micro ventures to start and grow?

Our company has grown in leaps and bounds over the past three years. We started with 88 customers in 2019 and we have grown to over 7,000 customers in the F.C.T. We have provided over 1.5 megawatts of solar capacity to microbusinesses such as phone chargers, barbers, and eateries. We also financed over 2,000 freezers and sewing machines for customers in 2021. We have received numerous testimonials from customers on how our services have helped to improve their livelihood. For example, we financed solar for a phone charger in Dei Dei named Hadiza. She was able to increase her income by 100 per cent due to reduced cost of electricity generation and longer opening hours, and the additional income was used to send her children to better quality schools. Furthermore, we are currently developing an insurance brokerage subsidiary to increase access to microbusiness insurance to mitigate losses from fire incidents, especially in major markets.

Is it possible to know how much Winock has given out as long or short-term loans to micro enterprises in Nigeria?

Winock has invested millions of dollars in giving out solar equipment, and cash loans to micro ventures. We secure our funds from foreign investors and local partners that align with our vision and want to add value to micro ventures.

Risk management strategy

Our aim is to disburse over N70 billion by 2032 ($100 million), and we have perfected a funding and risk management strategy to achieve this aim.

 In how many states is Winock operating or investing in?

We currently operate in the F.C.T., Niger and Nasarawa states. We focus on semi-urban locations where customers do not have easy access to banks. We plan to expand to all major commercial states in Nigeria by 2030.

How have you found the Nigerian operating system? Some have complained that it is very difficult to invest and succeed here. What is your take on that?

We have found the Nigerian operating system to be manageable. Our experience has been good because we focus on developing strategies to address core business problems. For example, one of the big issues is the constant depreciation of the Naira against the Dollar which causes companies to incur significant FX loss and unexpected increase in operating expense. We developed an innovative FX hedging strategy that has completely removed FX risk for Winock. Although one cannot deny that challenges such as insecurity, poor electricity supply, and economic instability exist; in my opinion, a bigger problem is that we Nigerians are self-defeating. We assume that Nigeria is the worst country in the world and as such, most Nigerians do not think it to be their responsibility to improve Nigeria.

I do not know of any continent, country, state, or any other form of community that started off already developed. In fact, some countries such as China, Malaysia, Vietnam, and many more, were behind Nigeria in development in 1960, however, because the citizens are patriotic and committed to their collective wellbeing, they have been able to overcome their challenges and have developed their countries. In the final analysis, rather than complain incessantly whilst being a part of the problem, it is the responsibility of businesses to develop legitimate and innovative ways to survive in any given environment whilst holding public officials accountable to improve the operating environment.

Winock also invests in solar power, which is a form of renewable and clean energy. Why is the solar project not gaining momentum in Nigeria as in other climes despite its clear benefits and affordability?

Solar is a sustainable form of electricity supply, especially for microbusinesses such as barbers, phone chargers, eateries etc. Considering that Nigeria has abundant sunshine, solar ought to be a leading source of electricity supply. But the economics of solar, and Nigeria’s macroeconomic factors, make it difficult for solar to gain momentum. At a national grid level, a solar plant project will require over 40 years to break even.

This is feasible in developed countries because their economy is more stable, and hyperinflation is less likely. Whereas, in developing countries like Nigeria, it is difficult to make such long-term investments, because inflation will inevitably erode the investment. At a business to business (B2B) or business to customer (B2C) level, solar was comparatively cheaper per Kilowatt Hour (kWh) than using a petrol generator. However, since the COVID pandemic, cost of solar increased by 200 per cent due to FX scarcity for importation, and it is now more expensive than petrol generator per kWh because petrol is subsidised. This has slowed down solar demand significantly. If petrol subsidy is removed, and the Dollar income earned by the Federal Government from crude sales is injected into the FX market to increase liquidity, then solar will become cheaper than running a petrol generator, although the reverse will be the case if the Dollar income is not properly invested by the Federal Government.

Interest rate appears to be killing micro ventures in Nigeria. What difference does your company make in this case since you seem to be more involved in this area?

With regards to high microloan interest rates in Nigeria, there are two uncorrelated reasons behind this: In the first instance, there are a lot of loan sharks, especially in the fintech space, that charge predatory rates as high as one per cent daily, to take advantage of the fact that micro ventures do not have easy access to loans. Central Bank of Nigeria and National Information Technology Development Agency have begun to shut down a lot of these fintech lenders that are operating illegally. In the second instance, microfinance banks charge five per cent interest monthly on average.

This is mainly because the operating cost of disbursing small loans to millions of people is high compared to disbursing large loans to a handful of people. In addition, investors charge lenders double digit interest rates per annum because of the perceived risk of lending to micro ventures, which equally affects the interest rates given to micro ventures by the lenders. Winock’s main objective is to drive down interest rates for micro ventures. We have developed and perfected a plan to reduce interest rates to 2.5 per cent monthly from January 2023. If we achieve this plan, it will revolutionise the Nigerian credit finance industry.

Does Nigeria have enough workable and sustainable MSME policies that can propel growth or does the country need more laws and policies in that regard?

The reality is that there are a lot of good policies in place, but there is poor implementation and lack of awareness. Before we can effectively evaluate the impact of policies, I think MSMEs need to first maximise the existing ones to determine whether the laws and policies can propel growth.

Beyond policy framework, what do you think should be done to broaden the scope of micro ventures in Nigeria?

Micro ventures face several systemic challenges that need to be addressed to enable them to thrive. One of the key challenges faced by micro ventures is the high cost of renting a shop. This causes them to set up illegal structures that is at risk of being demolished without notice by government. For example, F.C.T. administration recently demolished Jabi Arts and Crafts Market, a market that draws a lot of foreigners

and provides stable income for subsistent artists. Although government could be legally correct by demolishing the market without providing an alternative, it has inadvertently caused joblessness and killed an industry that could be developed for exports.

Rather than destroying temporary structures, government ought to know that micro venture owners cannot afford to rent a shop, and considering the importance of micro ventures to the Nigerian economy, government ought to provide affordable permanent structures for micro ventures to enable them to thrive.

Another systemic challenge is access to official FX rates. Since Nigeria is heavily import-dependent, any increase in USD value, Naira depreciation leads to an immediate increase in the price of imported goods, and this is a major cause of the rising inflation. To ensure a stable economy, micro ventures should be able to access FX at official rate through Deposit Money Banks, DMBs.

Poverty is still high in Nigeria, what can be done to reduce or eradicate the negative syndrome in the country?

Nigeria’s poverty rate is high because we Nigerians do not produce enough to cater for the entire population. To tackle poverty, we simply need to increase production to match our population growth rate. In modern economics, the wealth of a nation is measured by Gross Domestic Product, GDP. GDP measures the monetary value of final goods and services – that is, those that are bought by the final user – produced in a country within a period. The four largest contributors to Nigeria’s GDP are agriculture, trade, information and communication, and manufacturing.

Nigeria’s GDP in 2020 was $432 billion and GDP per capita was $2,097. This is very low for a country of over 200 million people. In contrast, Trinidad and Tobago’s population is 1.4 million with $22 billion GDP and $15,384 per capita. To increase production, we need to improve the quality of education, to ensure that our people know how to produce; improve electricity supply because it is key to modern day production: and ensure security, so that our people can feel safe to go to their places of work to produce.

For example, agriculture is the largest contributor to Nigeria’s GDP, but it is currently retarding due to poor knowledge of farming, poor electricity supply, and increasing insecurity in farmlands. Nigerians have what it takes to improve the economy through increased production, but we are seriously being held back by a culture of materialism and corruption.

We do not have a sense of collective development and nationhood. And no one is shielded from the current ugly situation, such as kidnapping. If we shift our culture to one of production and sustainability, and our resources are invested into increasing production, poverty can be eradicated in less than a decade.

What should Nigeria be doing to draw down more Direct Foreign Investments and boost the economy, which is facing serious strain?

Although there is currently around $1.3 trillion of “dry powder” in the private equity space, Nigeria is failing to attract foreign investors because of currency instability, poor electricity supply, and insecurity. FX risk is high in Nigeria because the rapid rate of Naira depreciation since independence has caused significant losses in highly viable investments. Furthermore, because of the low influx of USD, it can be difficult for foreign investors to source FX for repatriation of funds. The FX issue can be solved through effective economic diversification. For example, Nigeria can earn FX through the exportation of agriculture and mining produce. However, insecurity and electricity supply issues will need to be resolved to encourage Nigerians to go into mining and farming. Without a stable currency, it will be very difficult to attract foreign investors, which is essential to provide the liquidity needed in the economy.

Nigeria privatised many of its core industries many years ago but it is clear that the exercise has not translated into any marginal benefit for the country. What can be done to regain these enterprises in order to create jobs, boost growth and add value to the country?

Firstly, I believe that the privatisation of core industries would have yielded result if executed properly and subsequent unforeseen issues did not arise. Secondly, for any country to work, it must be led by leaders that are focused on long term development and the welfare of its people. Thirdly, for any leader to perform, its people must ensure that policies are followed, and the leaders are held accountable, and vice versa. Currently, Nigeria is not working because most of its leaders are focused on self-serving actions and its populace are not holding them accountable. In most cases, its populace participates in furthering the interests of the selfish leaders for their own little gain.

Irrespective of any well-intentioned plan to create jobs, boost growth, and add value to the country, it will fail because those in public office that we have entrusted to execute such plans are more interested in their material enrichment than in the welfare of the people. 

It is very easy to set Nigeria on the right path of progress and development if we have the right leaders. Once we have the right leaders in place, they will need to identify key underdeveloped industries and encourage participation in them through policy incentives, educational programs, and startup grants. It is well known that Nigeria is highly blessed with resources and human capital. Virtually every natural resource and service industry in Nigeria, including oil and gas, is vastly underdeveloped.

As we grow these underdeveloped industries and provide quality education for our people, inevitably, jobs will be created, and value will be added to the country. The solutions are available and readily implementable, but as a people, we will need a shift in mindset, from material enrichment to collective welfare, before we can set Nigeria on the right path.