The responsibility of every forward-thinking Government is to provide an enabling environment aimed at facilitating productivity, causing its people to thrive and impact prosperity, both for the economy and every resident. Exemplary policies and interventions that enable economic advancement through employment generation and wealth creation must be established.
With the Government still exploring opportunities and strategies to enhance the living standards of its residents, came the COVID-19 pandemic accompanied by unexpected economic effects. The effects cut across key sectors and industries across the world, forcing leaders to think creatively in establishing interventions to ensure the survival of their respective economy’s.
One of the strategic interventions of the Lagos State Government, Nigeria’s commercial capital and center of excellence, is the establishment of the Lagos State Employment Trust Fund (LSETF) in 2016. The agency was set up with a mandate to create jobs and they deliver this by providing employment and entrepreneurship opportunities for Lagos residents. LSETF provides access to affordable financing for entrepreneurs and to tackle unemployment also offer skills development and job placement for young Lagosians.
On access to affordable finance, LSETF has supported over 11,000 Micro, Small and Medium Enterprises (MSMEs) through its Loan Programme, which attracts one of the lowest interest rates per annum in the country compared to other financial or lending institutions. This support has provided relief to beneficiaries who typically go through the nerve-racking process of repaying loans with interest of over 30-40% or even more.
LSETF has disbursed about N7.3 billion to 11,508 beneficiaries, who have in turn created nearly 100,000 jobs in their businesses as of April 2020. The Fund through its employability program has trained and certified over 5,000 young people and placed over 50% in jobs with some running their own business. Also, through Lagos Innovates which is focused on supporting innovation driven enterprises and providing tech talent, LSETF has supported 117 technology startups with workspace vouchers and trained 18 young people to secure highly sought-after tech skills that attract immediate jobs.
LSETF entrepreneurs have collectively put about 100 thousand young people to work while fulfilling their loan repayment obligations. But with the outbreak of the coronavirus (COVID-19) pandemic, businesses, especially small businesses, responsible for over 80% of the country’s jobs, have been significantly impacted by some stringent measures deployed in the effort to disrupt the transmission chain and flatten the growing infection curve.
Precautionary measures led to a total lockdown of businesses, leading to stagnation, impacting business performance and capacity to meet prior financial obligations. The need to plan, prepare and ardently weather this raging economic storm became almost unlikely to bear as no solution or help seems to be in view as larger businesses and institutions moved to survival mode.
Fortunately, LSETF rose to demonstrate its ethos of being more than a financial lending enabler with the announcement of an intervention plan. To help cushion the economic effect of the COVID-19 pandemic, LSETF offered a three-month moratorium on loan repayment for the beneficiaries of its Loan and Hub Financing Programmes designed for MSMEs and technology start-ups in the state.
As the lockdown took effect, LSETF suspended its “Lagos Innovates Workspace Vouchers Programme”, aimed at supporting and facilitating access to well-equipped work spaces and learnings for potential innovators and founders of start-ups in the Lagos tech ecosystem.
Speaking on the announcement, the Acting Executive Secretary, LSETF, Mrs. Teju Abisoye said that the move was “in recognition of the difficulty that businesses may encounter this period, we understand that many of them will not be able to meet their loan repayment obligations. Therefore, we hope this announcement will serve as a spark of optimism in anticipation of a quick return to normalcy and business continuity.”
Without delay, the palliative measure became available to performing loan beneficiaries and those with past-due obligations of not more than sixty (60) days. The process for the application was simple and accessible via online platforms, as applicants were expected to complete a loan repayment moratorium form ahead of securing a written acceptance of the approved loan moratorium.
Beneficiaries of the moratorium were elated about the intervention and said they become even more trusting of Government-led support programmes.
Seun Fajebe, Chief Executive Officer of Imperium Innovations, a company with its primary focus on agro-processing said COVID-19 has been a bitter-sweet experience; an opportunity to learn, restructure and re-strategize. According to Seun, some production, labeling, and packaging materials must be imported into the country, and the suspension of air travel and border closure, spiked prices for these materials, resulting in a struggle to balance production and sales cost while grappling with customer retention.
“While adjusting to these new business outcomes with low cash flow, I became worried as my loan repayment date was soon approaching. As soon as I got the mail about the moratorium, I applied immediately and got approval. This measure has been a lifesaver, with the substantial drop in revenue and the funds which originally should go into loan repayment have now been channeled into other things which in turn has helped in saving cost. Apart from the moratorium, the training and mentorship support I attended preceding the lockdown has helped in making the right and needed decisions for my business in these trying times. Thank you to the State government and thank you to LSETF for this initiative”, he enthused.
Another beneficiary, Amaka Umeike, Founder and CEO, Natural Nigerian, a manufacturing and retailing company in the beauty industry narrated how challenging business has been and how the timely relief by LSETF has provided succor.
“The lockdown was challenging for our business because it meant that none of our staff could come to work, produce, or handle orders. With an ongoing loan (LSETF) and other business expenses we had to pay; this was quite worrying. We had never defaulted on our loan and did not want to. We were thinking ahead and reached out to LSETF about 1-2 weeks before the lockdown to see if there would be a moratorium. Thankfully, they came through just as the lockdown began.
The moratorium was welcomed and gave us much relief. We are grateful for the consideration. We spent the lockdown educating our customers, and as a result, the business has been on the up. We were able to pay all our staff half their salaries for April even though they did not work, and we are on course to meet all our business expenses for the month. Thank you LSETF and Lagos State Government.”
Game Centre owner, Ogunwande Temitope narrated how difficult it has been to keep his business up and running, paying salaries to members of his staff, assisting friends and families, following the halt in operations for over a month in line with the social distancing directives by the federal and state Government.
“The approved moratorium gives me more time to save, prepare, plan, expand, and diversify into new businesses. I appreciate the cushioning palliative from the State Government through LSETF, as it is a compassionate offer at such a crucial time as this. I look forward to the re-opening of the economy as I look to delve into more sectors and expand my current business. The initial loan I took was to open a new outlet of business, of which I employed six staff members, and I intend to open more stores with the help of LSETF.
“I want to thank LSETF for their support during this period, and the training received before the loan disbursement at the initial stage, especially on book-keeping. It taught me how to keep my records and plan key expenses, including payment of salaries ahead. It has been so handy and helpful”, he added.
Baruwa Rofiat, who is into the production of nylons, has been experiencing a rough patch in her business as COVID-19 wave hit her and her business. For her, no production equaled no sales and the agonizing decision of letting members of her staff go as she could no longer cater to their expenses.
“Hearing the news of the extension of loan repayment, I was thrilled because I already had trouble just thinking of my loan repayment. I want to say thank you to the Lagos State Government and the LSETF for having us in mind, they showed that they care about our welfare and our businesses too. I pray that very soon; everything will return to normal” she said.
In reacting to the feedback from beneficiaries, Acting Executive Secretary, LSETF, Mrs. Teju Abisoye said this decision by LSETF is more than just a timely palliative. “We are passionate and committed to enabling every productive resident in Lagos to dream, grow, and succeed in their endeavors. We are keen to help them get access to affordable financial and other institutional support they need to create wealth and employment for our youth, while significantly contributing to building a 21st Century Economy for Lagos in alignment with the State Government’s THEMES agenda. We understand that to do this; we must engender an enabling environment for small businesses to operate and thrive”, she said.