The Federal Ministry of Industry, Trade and Investment in collaboration with the World Bank has launched an incentive facility – tagged Growth and Employment (GEM) equity window - that will enable qualified venture capital and other private equity firms to provide equity finance to Micro Small and Medium Enterprises (MSMEs) in Nigeria, to facilitate diversification and overall competitiveness. But Barbara James said private equity requires no collateral, no interest, no loans and no repayment of finance for growth business and infrastructure. “But financier gives money in exchange for shares in business and also a part owner, shareholder and partner.”

Project Co-ordinator, Mr Labaran Sani, from the Ministry of Trade and Investment, while speaking at the launch in Lagos, said GEM seeks to support participating micro, small and medium enterprises in improving their sales and productivity and thereby increase their market share and their contribution to employment. “The strategic objectives of GEM include economic diversification, increase in overall competiveness, increase in investment both domestic and foreign, and sustainable increase in jobs, especially higher value job.”

According to Sani, the project’s ultimate goal is to create employment for Nigerians before its life’s span ends by 2018. His words: “GEM has a life span: it ends by September 2018. It became effective from July 2013. It’s a five-year programme. But what we are saying is that whoever we are going to support in the next few years should be able to stand on his own. This project cannot continue forever; but when the government realised that its objectives has been achieved and more people are yearning for more, then we can go ahead and book a seat to approach the World Bank for more assistance to create another project that can support MSME’s. Frankly speaking, government’s ultimate goal is to create employment for the unemployed Nigerian people though a private sector project. We want businesses to grow so that they can perform well. If you do well in your business, there’s a tendency that you will employ more hands.”
On eligibility criteria, Michael Wong, World Bank and GEM Project PIU, said those eligible to participate are; venture capital and private equity fund managers, other private equity capital providers, institutional investors in MSMEs, policy makers in MSMEs; representatives and associations of MSME Business Owners and MSME Entrepreneurs; and service providers (such as lawyers, bankers, business development consultants) to the MSME sector. While those eligible to access the equity window grant are the private equity, venture capital and other private finance companies that provide equity finance to MSMEs.

Wong said the proposed design of GEM grant support is in two windows: “In window 1, private finance companies registration, prospective investigated companies on Business Innovation and Growth (BIG) online platform; a grant equivalent to 2 per cent for the screening of planned investment based on selected firms and also to make sure the impact agreement on a randomisation of a set of screened firms. While in window 2, a further grant of 2 per cent of the invested amount at the time of commitment to the investment will be disbursed. On this equity fund, any enterprise that is interested in participating can also enquire into the GEM project and can also benefit from the fund. The windows are for equity companies, those who provide capital to aspiring high growth potential fund and windows are designed to support those equity companies to actually provide funding to the MSMEs.”

Chief Executive, Henshaw Capital Partners, Barbara James, said the GEM project is implemented through the Business Innovation and Growth online platform that will support MSMEs through various training programmes, consulting services and performance-based grants, adding: “The GEM project is hosted by the Federal Ministry of Industry, Trade and Investment and sponsored by the World Bank. My role is to coordinate. At Henshaw Capital Partners, we promote private equity capital in Nigeria, growing businesses, creating jobs and we’ve been doing this for many years. This facility is one of many interventions that we have proposed. This window will support private SME’s management to invest in small and medium enterprises. The GEM project is a broader SME project and there’s going to be a lot of awareness campaign across the country.”