Connect with us

Business Home

How We Should Structure The Unstructured



Olayimikah Bolo, Principal Partner at Falkirk Limited(Falkirk Risk)

The just concluded 3-part post on “Why We Must Structure the Unstructured” highlighted the importance of the Micro, Small and Medium Enterprises (MSMEs) sector as a catalyst for sustainable economic development, with observable impact on employment creation and poverty reduction.

However, knowing the “Why” without proffering plausible solutions on the “How” will at best be a fruitless reflection.In contemplating the “How” as a professional Risk Manager, my reflection started by considering the “Context” of the sector – including the cultural factors and human behaviour. At the end of my reflection, the two nagging questions were as follows: (1) What are the “intentional actions”that can be taken to “Structure the Unstructured” considering that the inherent sector risks and challenges are largely known and do not fall into the “realm of the unknown” (the figure below summarises the MSME sector challenges/risks); and (2) What are the “intentional actions” that can be taken to stem the noted high (and growing) level of “Informality” in this sector?

These are indeed questions that require deep reflection and a determination to “Structure the Unstructured”!

Reflection on the nagging questions from my last post continues with a subject I find most intriguing -the existing high and rising level of informality. At the bottom of the MSME pyramid are the micro enterprises (MEs) with the largest population and relatively lower income bracket- in varying degrees (see below figure). Whilst a sizable percentage of the players in this sector are ill-educated, majority knowingly choose to remain informal, primarily for reasons of additional costs of formalisation that in most cases prove excessive –e.g. the high entry cost of registration and the recurring costs thereafter like taxes, licencing fees, contributions, etc.

This brings to mind the MSME registration initiative by the FGN through the Corporate Affairs Commission (CAC) in Q4 2018, where a special window was granted MSMEs to register their businesses at a half-cost of ₦5,000. A large percentage of the micro enterprise players may not be able to bear this additional cost.

To put the micro enterprises in the lower rung of the income bracket in proper perspective, think of the following, most of whom are either found on the corner of every other street, or operate from their homes – the roadside mechanic with their apprentices,the “mama puts” or “bukkas”,the barbing and hair dressing salons, the Mama Deborah and her cleaning ladies, the list goes on and on…

In “Structuring the Unstructured”, in addition to tax incentives that will “help” the MSME cross the estimated “3-year failure” mark, one should consider value creating initiatives that will encourage the players to commence the formalisation process, thereby stemming the tide of rising informality…

Whilst creative incentives to spur the MSME sector are being formulated and considered by Federal and State Government Agencies, the industry players themselves, need to be deliberate on surviving beyond the estimated lifespan.

A key process in being deliberate is the adoption of risk management. The concept of risk management is explained in my article “The Art of Risk Management – On A Lighter Note”

It is all about understanding what may go wrong in the chosen line of business, and proactively put appropriate risk response measures in place. Being reactive when an event materialises may cost you the business altogether!

Also Read Meet Sivi Malukisa, The Congolese Entrepreneur Whose Food Startup Is Promoting DRC Cuisine

Key challenges or risks facing the sector are detailed in my earlier post Every MSME can proactively apply the process shown in the below figure in a bid to Structure The Unstructured and thereby increase their chances of survival.

Whilst the MSMEs are encouraged to increase their chances of survival through the proactive internal application of risk management processes, a fascinating external mechanism is through the use of Credit Guarantee Schemes. As with Credit Guarantees, the lender of funds is provided with a recourse in the event of default.

Credit Guarantee Schemes (CGS)provide the needed financial and economic additionality for MSMEs. The preferred model is that of risk sharing by the Credit Guarantee Institution and the lender, as this should ensure the application of adequate credit rigour to viable and sustainable transactions, whilst curbing the temptation for fund providers to transfer non-performing portfolios.

Though most Institutions offering CGS in developing countries are government owned, it is time for creativity and thinking out of the box. It is time for our Institutions to Collaborate with the Government – howbeit Federal or State – to engender economic growth. Much like the Central Bank’s Risk Sharing scheme for the Agric Sector – NIRSAL, funds can be structured and provided by the CBN, local and international development agencies, targeted at specific economic sectors to migrate the MSMEs from low -to medium -to high value-adding activities.

Institutions with credit risk assessment expertise like the Credit Bureaux should begin to see the bigger picture and consider the value chain for plausible forward integration… a Credit Guarantee Division perhaps? Surely food for thought in a bid to “Structure The Unstructured.”

By: Olayimikah Bolo

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Hospitality & Tourism

Radisson Individuals makes its African debut with hotel signing in Ghana, to open its doors in October 2021



Image Source: Radisson Hotel Group

Radisson Hotel Group is proud to announce its first Radisson Individuals property in Africa, with the signing of Earl Heights Suites Hotel, a member of Radisson Individuals, Accra, Ghana. Due to open by the end of 2021, this new addition places the Group firmly on track to achieving its objective of reaching 150 hotels in operation and under development by 2025.

Located in Dzorwulu, the property is currently undergoing a full renovation and is on schedule to open within this year. Just 5km from Kotoka International Airport (KIA), the main access point by air for domestic and international visitors, the serviced apartment property is conveniently located near shopping malls, restaurants, as well as the University of Ghana, situated north of the district. Also within reach, is the tranquil Legon Botanical Gardens, with its canopy walk, rope courses, canoeing and rich birdlife.

Due to its strategic geographical location, ease of access, and aviation facilities and connections, Accra has become a conference and aviation hub for West Africa. It is also dominated by local and international business activities, making the city one of the most attractive African cities to do business.

The 58-serviced apartments property will comprise of modern studios as well as spacious and elegant one- and two-bedroom suites. Creating a true destination for its guests, the property will offer culinary options in the restaurant, The Society, which will include outdoor seating as well as in the hotel bar. The property will also feature a spa, gym, pool, convenience store, and business centre, providing the perfect base for both business and leisure.

Radisson Individuals is a conversion brand that offers independent hotels and local, regional chains the opportunity to be part of the global Radisson Hotel Group platform, benefit from the Group’s international awareness and experience, with the freedom to maintain their own uniqueness and identity.  Radisson Hotel Group plans to more than double its serviced apartments portfolio within the next 5 years across EMEA. Today, serviced apartments represent around 10% of the Group’s EMEA portfolio with 45 properties and more than 5,400 units in operation and under development.

Erwan Garnier, Senior Director, Development, Africa, Radisson Hotel Group, said: “We have identified Ghana as a key focus country in our five-year development plan and, Accra as a focus and primary city. The signing of the property, which compliments the Radisson Hotel & Apartments Accra announced last year and scheduled to open in 2023, is also aligned with our current conversion-focused growth strategy, which will remain a priority, especially post-pandemic. We are therefore proud the Radisson Individuals African debut, will be on Ghanaian soil, carving the path for the new brand to continue its expansion across the continent. In proud partnership with Earlbeam Group of Companies, we are thrilled to be contributing to the country’s tourism industry, a key pillar of the national economy.”

Alfred Danso Darkwah, CEO of the hotel’s owning company, Earlbeam Group of Companies, said: “The Earl Heights Suites Hotel partnership is an exciting opportunity – it brings together the union of Radisson Hotel Group and The Earlbeam Group Of Companies, two well-seasoned brands from the hospitality and real estate sector respectively. This will be the first branded apart hotel in Ghana, completely unique, providing each guest a boutique home-away-from home experience. In addition, it delivers partner confidence, guarantee of service standards, and assured safety and security, leaving a positive mark on Ghana’s hospitality sector. We believe this Radisson Individuals hotel will inject much-needed life within the local hospitality industry and pave the way for upcoming projects between Radisson Hotel Group and The Earlbeam Group of Companies.”

Image Source: Radisson Hotel Group

Herewith the link to the renders of the hotel, which is on track to open its doors in October this year Radisson Individuals

Radisson Hotel Group operates to high standards of performance and advocates socially and environmentally sustainable business practices. More than ever, Radisson Hotel Group’s highest priorities remain the health and safety of its guests and employees. The Group partnered with SGS, the world’s leading inspection and certification company, to implement the Radisson Hotels Safety Protocol, which ensures the highest hygiene standards and strengthens the Group’s existing rigorous sanitation guidelines. In the run-up to the opening of Earl Heights Suites Hotel, a member of Radisson Individuals the hotel will implement the Radisson Hotel Group brand standards including the Radisson Hotels Safety Protocol related to safety and security.


Continue Reading


TuneCore Launches Operations in Africa, Appoints Two Female Regional Executives



TuneCore Jade Leaf and Chioma Onuchukwu

TuneCore, the leading digital music distribution and publishing administration company for independent artists, has launched operations in Africa. Jade Leaf has been hired as Head of TuneCore for Southern Africa and will share responsibility for key countries in East Africa with Chioma Onuchukwu, who has been hired as Head of TuneCore for West Africa. Both Leaf and Onuchukwu will report to Faryal Khan-Thompson, Vice President, International, TuneCore.

Onuchukwu will be based in Nigeria and oversee countries in West Africa including Nigeria, Ghana, Liberia, Sierra Leone and The Gambia. She will also look after Tanzania and Ethiopia in East Africa.  Leaf’s territory encompasses Southern Africa, including South Africa, where she will be based, as well as Namibia, Botswana, Zimbabwe, Zambia, Malawi and Lesotho. Leaf will also manage TuneCore operations in East African countries Kenya and Uganda.

Said Onuchukwu, “I am elated to be joining a renowned, independent music distribution powerhouse, especially in an incredible era for music creators in Africa at a time when we are gaining global recognition and increasing momentum. I look forward to collaborating with and supporting local artists.”

Before joining TuneCore, Onuchukwu was Marketing Manager at uduX Music, a music streaming platform in Nigeria. There she worked directly with popular African artists such as Davido, Yemi Alade, Patoranking, Kizz Daniel and more.

Commented Leaf, “I am incredibly excited to join the team in a time where the global conversation is around independence and ownership. TuneCore opens up a world of potential for independent artists at every level of their careers. Africa is home to a diverse range of artists who are seeking a reliable distribution service who understands their local needs and can ultimately give them the opportunity to turn their art into commercial success.”

Previously, Leaf worked at Africa’s largest Pay TV operator, Multichoice as the Marketing Manager for Youth & Music Channels, where she led brand re-imaging and marketing efforts for Music TV giant Channel O. Before that, she worked at Sony Music Entertainment Africa, focusing on African artists and content, as well as numerous marketing campaigns & projects for local and international artists.

There has been a meteoric rise in the uptake of streaming services in Africa, the growth has been attributed to several factors such as an increase in internet penetration via smartphones, the entrance of international and local streaming platforms in key territories and its youth population – More than 60% of African’s are under the age of 25.

In 2020, TuneCore saw an increase in music releases globally, with many African artists opting to use the DIY Distributor – DJ Spinall and Small Doctor in Nigeria, Spoegwolf in South Africa, Mpho Sebina in Botswana and Fena Gitu in Kenya to name a few.

Stated Khan-Thompson, “Africa is an extremely exciting music market with a lot of potential for growth. By hiring Jade and Chioma to lead our efforts, TuneCore is well positioned to maximize opportunities for independent artists across the continent. Both Chioma and Jade bring a wealth of experience and genuine interest in helping artists make their dreams come true. I couldn’t be more thrilled to have two incredible women representing the TuneCore brand in the continent”



Continue Reading

Business Home

IFC Invest in Liquid Telecom Bond to Support Broadband Connectivity in Africa



IFC, a member of the World Bank Group, invested in Thursday’s bond issued by a subsidiary of Liquid Telecommunications Holdings Ltd., which will allow the telecoms and technology solutions company to expand access to broadband Internet and digital and cloud services across Africa, further facilitating the growth of the continent’s digital economy.

Proceeds from the bond issued by Liquid Telecommunications Financing PLC, a wholly-owned subsidiary of Liquid Telecommunications Holdings Ltd, will enable the company to refinance existing debt and free up funds to expand its digital infrastructure network across Africa, including in markets with low broadband penetration.

By developing digital infrastructure, Liquid Telecommunications, Africa’s largest independent fiber, data center and cloud technology provider, aims to increase digital connectivity and inclusion in Africa and support the region’s growing digital ecosystem.

IFC played an anchor role and subscribed to 16 percent of the bond, equivalent to $100 million, which was listed on Euronext Dublin, Ireland’s main stock exchange, on February 25, 2021. The issuance raised $620 million.

Internet access in Africa relies largely on mobile networks, many of which are enabled by wholesale connectivity providers such as Liquid Telecommunications. Broadband penetration is low across the continent, with a mobile broadband penetration rate of 34 percent and fixed broadband penetration of less than five percent in most countries across sub-Saharan Africa, excluding South Africa.

“We are delighted that IFC has taken a significant anchor position in our new bond. In the countries in which we operate there are great opportunities to address under developed telecommunications and Internet access, as well as to accelerate the adoption of digital and Cloud-based services. Our refinance enables us to continue to invest in the African digital eco-system including driving penetration of digital and Cloud-based services to businesses who may not previously have had the resources to benefit from them, helping to bridge the connectivity divide, which is more crucial than ever in our current circumstances,” said Nic Rudnick, Liquid Telecom Group Chief Executive Officer.

“Our best chance at ensuring much-needed internet access for everyone in Africa, from large corporates and small businesses to individuals, is to invest in digital infrastructure. Our investment in the Liquid Telecom bond will help the company free up capital to further expand broadband access across Africa, laying a solid foundation for a faster, more resilient recovery,” said Stephanie von Friedeburg, Interim Managing Director and Executive Vice President, and Chief Operating Officer of IFC.

To support Africa’s digital economy, which could be worth $180 billion by 2025, IFC provides financing to mobile network operators, independent tower operators, data centers and broadband connectivity providers. IFC also provides capital to help entrepreneurs and innovative businesses grow and works with financial institutions and telecommunications companies to speed the adoption of digital payments and lending to expand financial inclusion.

Source IFC


Continue Reading


Most Viewed