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INTERVIEW WITH LSETF EXECUTIVE SECRETARY; AKIN OYEBODE

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Akin Oyebode is the Executive Secretary of the Lagos State Employment Trust Fund and a trained Economist. Prior to being appointed, he spent over a decade in various banking roles with First City Monument Bank and Stanbic IBTC Bank and also worked as a research assistant at Lagos Business School.

The Lagos State Employment Trust Fund is a #25billion Fund with the mandate to directly invest in helping Lagos residents grow and scale their Micro Small and Medium Scale Enterprises(MSME’S) or acquire skills to get better jobs.

We had a chat with him discussing the future of Lagos State Employment Trust Fund opportunities and empowering entrepreneurship.

  • What is the LSETF and what are its major objectives?

LSETF is the Lagos State Employment Trust Fund, an agency of the Lagos State Government, established in 2016 by the Lagos State Employment Trust Fund Law of 2016. The fund, a brainchild of Governor Akinwunmi Ambode was established to ensure job and wealth creation opportunities are provided for Lagos State residents.

 

  • Has it been easy for the LSETF to find eligible businesses to disburse funds to? If no what are some of the challenges encountered?

We have received over 25,000 applications and approved 6,500 loan requests. So, I can say it’s been relatively easy to find eligible businesses, but only after we disbursed the first tranche of loans. The biggest challenges were creating awareness and earning public trust. We managed these challenges by engaging people at the grassroots via LGA town hall sessions, and using both traditional and digital media channels to drive awareness. We also held public cheque presentation events, which helped build public trust around the program.

 

  • Since the establishment of the fund, what are some of the notable milestones/success stories you have recorded?

We have just started, so it is too early to list milestones. However, we have approved over 6,500 loans worth N5 billion and disbursed 5,000 loans worth N4.1 billion. We are also starting to see a rise in job creation numbers, and approximately 400 of the best businesses we gave loans to have employed over 3,500 people within 8 months. It’s still early days, but also signing a $4 million employability partnership with UNDP showed us that partners are beginning to recognize our model as an impactful and sustainable one.

 

  • What are some of the areas SMEs can better position themselves to access this fund?

Investment readiness. Most of the MSMEs find it difficult to provide the necessary information to access the loans. In many instances, we decline some of these requests because the businesses cannot articulate their funding need, or demonstrate an ability to repay the loan.

For micro businesses, we find that those who are part of an organized group or cooperative society are usually better prepared and submit credible applications.

 

MSMEs must also be compliant with the laws and regulations that guide their operations. In many cases, the businesses don’t comply with personal and company tax requirements; cannot demonstrate good HSE processes; and cannot provide evidence of pension and health insurance compliance. It is difficult to raise funding if you don’t show the willingness and ability to comply with the rules of play.

 

  • What are the focus sectors of the LSETF and why were these sectors chosen?

At the moment, we are sector agnostic and will accept applications from all sectors. However, as we start to assess impact and performance, we will set sector limits based on the job creation and loan repayment performance of individual sectors.

 

  • Which sectors have recorded the highest amount of disbursements and how is the impact of the funds on this sectors being measured?

Since Lagos State is underpinned trading and service based economy, these sectors have a significant share of our portfolio. However, other sectors like ICT, hospitality, agriculture and education also have a healthy share of the loan book.

 

  • Prior to becoming the Executive Secretary of the LSETF, you were working with SMEs in the private sector, what influenced your decision to leave the private sector for the public sector?

It was a personal decision to walk the talk and take a once in a lifetime opportunity to serve my home for almost 4 decades. It was also because I trusted the Governor of Lagos State, who offered me this opportunity, and believed in his vision for Lagos State. Finally, I was convinced the job was one where my private sector experience was very relevant, and I could genuinely contribute my little bit to the development of the state.

 

  • Do you think there is a good representation of young professionals in the public sector; if no, why is this so?

I think the representation is growing, and this is another reason I took the job. For example, in Lagos State, there are quite a few parastatal like the Lottery Board, LASPARK and LASWA, whose heads are young professionals. There is also a pipeline of young professionals in leadership roles across various Ministries, Departments and Agencies. We will continue to see a rise in young professionals, but as at today, Lagos and Kaduna States are trailblazers. Also, if you look within the Presidency, the President and Vice President also have a lot of young people working in key roles. So while we might not have cabinet ministers under 40, the next layers of key policy makers and implementers have a healthy collection of young and competent people.

 

  • What do you think are some of the opportunities available for potential Public & Private sector collaborations to empower small businesses in Lagos State?

I think the opportunities are endless. There are opportunities for the private sector to ensure small businesses are incorporated in their supply chain, which usually speeds up the formalization of these entities. Also, the private sector can pledge to improve payment terms on small ticket contracts which ensures the MSMEs do not suffer from liquidity/cash flow squeezes, a major reason for their failures.

 

  • In working with SMEs in both the private and public sector, what factors have you identified as being responsible for the high mortality rate of small businesses in Nigeria?

Three main issues: A) Capacity: Many entrepreneurs are usually accidental entrepreneurs and don’t have the required skill or experience to manage businesses, especially in the early period of turbulence. My experience has shown that entrepreneurs who have built considerable work experience either as apprentices or in structured organizations, and those who have previously failed at business, are usually more successful. B) Access to markets: Nigerian business are not export competitive, therefore all compete for limited domestic opportunities. In addition, most MSMEs are not part of structured value chains which makes their sales erratic and volatile. C) Access to and Cost of finance: With the risk free rate of 17%, it is difficult for Nigerian businesses to access finance, since lenders can make real returns by lending to the government. And even those lucky to receive commercial funding will buckle at the interest rates of almost 30%. Finally, the limited penetration of other forms of capital means most businesses are starved of capital and fail.

 

  • Lagos state is undoubtedly the most financially viable state in Nigeria, what are the future plans of the LSETF to ensure this is sustained?

Our role is to provide financial support needed to reflect the productive units in the formal and informal sectors. By helping businesses grow and employ people, we are not only stimulating production, we are also increasing disposable income from the jobs being created. Finally, by ensuring the businesses we bank are formalized and also tax compliant, we are increasing government’s revenues which will be put back to developmental projects. This cycle ensures continuous growth, which ensures the financial viability of the state is not only sustained, but enhanced.

 

XOXO

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