Kehinde Oyeleke on Nigeria’s recession and how small businesses should raise capital

8 min read
Kehinde Oyeleke, former Arthur Andersen executive, now runs Seedvest, an SME funding and advisory firm in Nigeria. He speaks on how Nigeria’s recession has made a bad situation worse for small businesses.


Kehinde Oyeleke is as unpretentious as they come. When we finally made it to his Ikeja office, stray pieces of paper covered his desk. Some of them were scrunched up. Others were lying there like lost tourists in a city center – no direction or intent.

He asked that we excuse the mess. “You know, it’s all in a bid to look busy,” he smiled rounding up a few of the stray papers and stacking them on one side of the desk.

The office seemed airless; not stuffy, but as though an independent air control center paused the air molecules. A split air conditioner was purring in the background.

“So do I look okay? I can use a tie and suit if you guys want,” he said looking in the direction of the photographer. He would later tell us that he was not good with ties, but was willing to make an effort on our behalf.

Any chance he got, he seemed to want to remind us that he was not some larger-than-life expert. But we knew better.

When Kehinde Oyeleke started Seedvest in 2002, he’d had a stellar accounting career with stints at the Corporate Finance division of Arthur Andersen, PricewaterhouseCoopers in New York and Capital Alliance, a private equity firm in Nigeria.


It was while at the private equity firm he saw the funding gap that was crippling Nigerian small businesses.

“PE operators are always looking for people that want to borrow $10 million, $5 million. And I see a lot of gaps – people that need N3 million, N2 million,” he said.

The trained accountant believed Nigerian banks are not set up to support small businesses.

“That leaves small businesses in the lurch,” he said, adjusting his glasses. “Our mission is to ensure that small businesses get access to finance they need to grow their business. And the range of what we give is between N30,000 and N50,000 to a woman selling by the roadside to as much as N25 – N30 million to SMEs that really want to expand their business.”

In 2001, mere months before Oyeleke started Seedvest – which now has a Microfinance Bank operation as well as the SME finance arm with 27 branches in Lagos and Ibadan – a CBN regulation was in the offing. The regulation mandated commercial banks to devote 10% of their profit after tax (PAT) to SME financing. But the banks were not on board for long.

The regulation faded into oblivion with only a handful of success stories. “Since then, SMEs have been orphans,” he said.

the hard part about funding SMEs

Ever the realist, he was quick to add that funding small businesses in Nigeria is difficult.

“Many of these SMEs don’t have good processes. Therefore, they could be very mobile. Somebody could be running a business today, the next thing you hear, he’s off to Canada along with your money,” he said.

Oyeleke understands SMEs. When he mentioned earlier that Seedvest gave out loans of N30,000 ($90) and N50,000 ($142), I was unable to comprehend how much of an impact that could translate to in a business.

He smiled knowingly when I asked about that. “There are situations where N30,000 doesn’t even buy you a meal,” he said, before launching into a full defense.

“Many of these people sell Boli [roast plantain] and use that to send their wards to school. If you already have your fryer, you only need plantain to make Boli? So if you have between N15,000 and N30,000 you are in business. And sometimes getting N30,000 to buy plantain or not could mean the difference between being able to send your kids to school and not being able to.”

It was a bleak picture.

Sitting across him at that cluttered desk, with the purring air conditioner and the photographer trying different angles while trying to remain unobtrusive, his response viscerally underlined the extent micro-loans affected lives of low-income families.

And Seedvest, he said, wasn’t just about giving loans. “We are actually about financially empowering both small and micro enterprises.”

It was easy to write that off as a self-promotional line. Except it made sense.

fund vs. business advisory

There are many ways for small businesses to get funding in Nigeria. There is the N220 billion MSME fund that Nigeria’s federal government launched in 2014. The Tony Elumelu Entrepreneurial Programme gives $1000 to a few small business founders every year. [Find a long list here]. Nevermind all these sources of capital, proper business advisory services may be more impactful.

“I have seen so many organizations that died. They have fantastic operators, everything checks out, but the funding structure was inappropriate,” he said.

A business with a long gestation period would do better with equity funding. To opt for debt funding would be to court early demise for the business, says Oyeleke. “Interest is going to eat up a major chunk of your income, and therefore, you may be under funding pressure even when the project is still under construction,” he said.

On the other hand, a short-term project could get by with bridge loans like the ones Seedvest offers.

“If you are thinking about funding your business and you are not sure what to do, then it’d help tremendously to get professional help,” he maintained. 

what the recession means for SMEs

kehinde oyeleke vconnect blog recession

Nigeria’s recession is biting hard on the population. Top Nigerian banks including First Bank, Diamond Bank, Ecobank, Zenith Bank and Access Bank, have laid off more than 8,000 workers between June and now. More than a few tech companies are also doing what they call “headcount reduction” outside the glare of mainstream press.

But in the face of dramatic economic downturns such as this, small businesses have been known to suffer the most.

According to Kehinde, the recession has only made a bad situation worse.

“The reality is that SMEs have always had funding difficulty. The recession has made it worse because it has increased the naira value of the money they need. Even though the items they need to buy remain the same, the cost of buying those materials have more than tripled. But again, how much of this cost can they pass successfully to the customers?“ he postured.

how SMEs should prepare for funding

Small businesses seeking professional counsel forms an essential part of Oyeleke’s thought process. Could he share what small businesses could do so they are more easily able to access funding?

Oyeleke sparked to life anew. He perked up in his seat.

“They need to get a business plan. And that is a term that is easily misunderstood,” he said. “People think this is a sheet of paper that people go the internet and download and fill in the gaps. What they need to do is outline their business. You need to understand what you are selling, who you are selling to, why people will buy from you and how much people will pay you.”

He held up two fingers, foreshadowing a new point. “The next thing you need to look at is, who is managing the business with you. The biggest problem that SMEs have is that everything revolves around them. So you need to ask yourself, ‘where is my team?’ Ensure that if you are indisposed for a week or so, the business doesn’t crumble around you.”

Entrepreneurs should also know if their business was under regulation. “Basically, I can’t just go out there and start an insurance company. I can’t do that; there are regulations,” he said.

“You need to figure out who you are competing with in this business. And finally, the founder needs to know if the business can be operated profitably,” he concludes.

A shy smile crossed his face. He wrapped his left hand around the right one, as though waiting for a verdict. It was some gesture in diffidence to remind me, it seemed, that he’d just shared an informed opinion and not a rule.

And it made perfect sense; Oyeleke was reminding me he’s not a larger-than-life expert.

And how can small businesses go about getting funding? I ventured finally.

“Sometimes it’s not every situation that you need money,” he suggested. “People have the obligation to seek out what funding sources are out there and who can advise on the best course of action. The time and energy spent in reaching out to good financial advisors will pay for itself with time.”

kehinde oyeleke vconnect nigeria's recession


Kehinde Oyeleke is the founder and group Managing Director at Seedvest, an SME investment and advisory company with operations in Lagos and Oyo state, Nigeria.


VConnect SME Stories is a weekly feature highlighting Nigeria’s most enterprising small businesses, exploring the stories of small business founders and sharing intelligence and actionable tips to start and run thriving small businesses in Nigeria. Read our archive.

An abridged version of this article appeared originally on HowWeMadeItInAfrica as What it’s like to be a small business in Nigeria.


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Gbenga Onalaja

Gbenga Onalaja was the former Content Strategist at VConnect and He oversaw the VConnect Blog, an SME blog dedicated to helping entrepreneurs start and run small businesses. He specializes in long-form content, email marketing, SEO, and reporting compelling brand stories. Follow him on Twitter @onalaja_

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