Integrated framework for establishing and financing start-ups in Nigeria: concepts
and cases
Sheffield Hallam University
By
Patrick Oseloka Ezepue & Nonso Ochinanwata
Introduction
• Micro and small to medium enterprises (MSMEs) have different needs and funding challenges compared to
large businesses for example access to capital and sound investment advice is more difficult for them
• These factors limit the capacity of start-ups and MSMEs in Nigeria to enhance the economic growth and
development of the economy
• Therefore need for ‘financing start-ups and workforce development’ in Nigeria via industry-facing business
management and apprenticeship programmes
• The key rationales include MSME job creation through HEI-industry-government collaboration (research-led
entrepreneurial ecosystem)
The objectives of the study
• RQ1: What challenges face the informal sectors of Nigeria’s economy and how should innovative start-ups be
established and financed to overcome the challenges, effectively, efficiently, operationally and financially?
• RQ2: Given the centrality of banking and financial services to Nigeria’s economic development, poor and
high-interest access to loans from them by potential start-ups, how should innovative enterprise support
firms be created and financed in order to improve the sector, for example a Nigerian Centre for Advanced
Research and Enterprise Development (CEfARED) and related challenger banks?
Related research and enterprise development initiatives
The following research and enterprise development (RED) initiatives will address these needs:
• An online Skills for Students, Graduates and Start-Ups (SSGS)
• An innovative Nigerian Renewable Energy Research and Consulting firm, which can roll out solar
houses and model solar villages as solutions to current energy-mix problems in the country
• A Centre for Advanced Research and Enterprise Development (CEfARED)
We use it as an illustrative case study in this paper, in order to practically explain the elements of the integrated
framework for establishing and financing start-ups in Nigeria
A framework for financing and establishing start-ups in Nigeria
Business Development and Financing Approaches
• Industry and market trends linked to industry and stakeholder needs analyses
• Exploring the nexus amongst national socio-economic development plans and budgets, remits of
government ministries, departments and agencies (MDAs) and MSMEs
• Analysis of trends in government budgets for the stated social intervention schemes across years
Loan segment and risk framework
• Loan segments
- Educated and non-educated customers
- Long-term growth and short-term growth
- Novel and conventional business
- Big loan and small loan
• Risk framework
-
High value proposition - high risk - likelihood - high impact
High value proposition - low risk - likelihood - low impact
Low value proposition - high risk - likelihood - high impact
Low value proposition - low risk - likelihood - low impact
Collaboration and business development programme
•
Credit-plus approach
- Loan and business development integration
•
Strengthening SME business models
•
Different value propositions for customer segments
•
Learning platforms and information sources for
- Physical
- Media
- Online
Elements of Born-global Firm Business Model
Strategic
Strategic
objectives
objectives
Competitive
Competitive
advantage
advantage
Key
drivers
Key drivers
Essential
Essential
components
components
Global
Global problem
problem
and
and customer
customer
needs
needs
International
International
entrepreneurial
entrepreneurial
capabilities
capabilities
Platform
Platform and
and cybercybermediated
mediated activities
activities
Business
Business and
and
social
social networks
networks
Novelty
Novelty (new
(new
markets
markets and
and
products
products
development)
development)
Unique
Unique and
and
differentiate
differentiate
products
products and
and
services
services
Technology
Technology married
married
with
with customer
customer
preferences
preferences
Leveraging
Leveraging many
many
distribution
distribution
channel
channel
Underserved
Underserved
markets
markets and
and
switching
switching costs
costs
Diversification
Diversification
Collaboration
Collaboration
Organisational
Organisational
culture
culture and
and
learning
learning
Elements
Elements of
of born-global
born-global firm
firm business
business model
model
Elements of born-global firm business model (Source: the authors)
Policy implications and conclusions
• We explored the challenges of poor financing, inadequate resources, poor understanding of
customer needs and identification of niche and underserved mass markets, and ineffective
solution of Nigeria’s economic management challenges, which could be addressed by using the
integrated frameworks presented in this paper, before detailed business planning
• Using the CEfARED as a main case study in the paper enabled us to moor the explored constructs
to reality
• Pedagogically, the results will support effective case- and problem-based learning within
disciplinary curricula linked to customer needs, and the economic development of Nigeria
• So far in Nigeria there is no link between start-ups and government economic development
initiatives. This paper fills this gap in knowledge through the initiatives.
Thank You For Listening