Three SMEs raised ₦100M in 10 days via Nigeria's first regulation crowdfunding on monieworx®

SEC-regulated crowdfunding intermediary, Obelix fund-raised ₦100 million in ten days from 9,324 registered small-ticket retail investors – for three Nigerian SMEs.

Nigeria's first regulation crowdfunding on monieworx®

Obelix 4.1.1 Alternative Finance Limited (Obelix), Nigeria’s SEC-regulated Crowdfunding Intermediary, today announced that it has fundraised N100 million from 9,324 registered small-ticket retail investors for the three most promising small and medium enterprises (SMEs) in just 10 days.

The investors were wholly from its waitlist of 42,545 early adopters. The average investment in the Private Notes was ₦10,725 ranging from ₦1,200 (smallest) and ₦20,000 (biggest) tickets. The longest duration of the new asset class is 90 days, at a fixed rate of 12% p.a.

A total of 15 eligible applications to raise funds were considered by the company’s Screening Committee but only three of the SMEs were accepted by Obelix to utilise monieworx®, its registered Funding Portal, to embark on their crowdfunding campaigns.

All the fundraisers have a good corporate governance record and are SMEDAN-registered. The three most promising small and medium enterprises that have their securities offerings hosted are, namely: Imose Technologies Limited, Alatiron Nigeria Limited and Q21 Solutions Limited.

Breaking the barrier in access to finance for SMEs in Nigeria

Formal SMEs number 40 million (representing 96% of all businesses in Nigeria), create 84% of jobs and contribute 45% of GDP while accounting for 8% each of exports and federal tax collections according to a recent joint report by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS).

According to a Formal MSME Finance Gap in Developing Countries report by the World Bank and the Société Financière International (SFI), the unmet financing needs of Nigeria's formal SMEs are estimated at US$22 billion yearly. The Financial Sector Deepening Africa (FSD Africa), an organization with a mandate to transform financial markets across sub-Saharan Africa, research revealed that the funding gap for SMEs keeps growing.

For context, the total banking loans reported by Nigerian banks was US$66 billion as of December 31, 2022, giving SME loans an 8% share of the combined loan book. The risk in this sub-sector is priced in the range of 28% to 35% p.a.

Gaining access to finance is by far the biggest constraint to SME growth. Over 70% of the 40 million SMEs cited a lack of finance and access to financing as the main constraint to their business growth. Access to advisory services and access to markets weighed in at a distant second and third. According to the Credit Bureau Association of Nigeria (CBAN), only 4% of the 40 million SMEs have access to credit from Nigerian banks. 80% of new SMEs in Nigeria thus die before their fifth year.

In summary, while the financing needs are increasing for small and medium businesses, they cannot access the capital to finance their operations and growth. The annual funding deficit at $22 billion is acute and thus preventing Nigerian SMEs from scaling and reaching the next level.

Over N1 trillion lost to unscrupulous Ponzi scheme operators

Obelix onboarded 42,545 users on monieworx®, over a 12-month period, through a combination of extensive community engagements to build a suitable “banking replacement”, and a first-of-its-kind early access programme (EAP) that nudges users to either join a community or a group.

The company’s target audience poll of 100,000 people revealed that the respondents are willing to invest even without the lure of outsized returns. Specifically, when asked what they value most, regulated products (15%), small ticket sizes (13%), money-on-demand without a withdrawal penalty (12%), short-term securities (11%), weekly coupon payment (10%), Web3-first approach (10%) and Community Subscription Offer Plan (CSOP, 9%) had a combined response rate of 80%.

Outsized financial returns (8%) ranked a distant eighth. This was a “serendipitous moment” as estimated losses to Ponzi schemes amounted to over N1 trillion according to data collected by Nigeria Electronic Fraud Forum (NeFF), an initiative established by the Central Bank of Nigeria, the Nigeria Deposit Insurance Company (NDIC) and SPERE Research.

Agri-SME and Oil & Gas featured as the most prominent sub-sector and industries respectively. These unscrupulous schemes have a common thread: the promise of mouth-watering returns. Nigeria’s SEC had consequently issued a circular that “Any unregistered investment scheme is illegal and may lead to prosecution of such operators and loss of investment by their clients”.

On aggregate, individual investors are most interested in near-term liquidity (stacked up to 43% of the response rates).

The Reg CF ecosystem is nascent but rapidly growing in Africa

According to McKinsey's Global Private Markets Annual Review 2022, “private debt is an asset class for all seasons as evidenced by continued fundraising growth, making it the only private asset class to grow fundraising every year since 2011, including through the pandemic”.

The Cambridge Centre for Alternative Finance (CCAF) predicted that crowdfunding in sub-Saharan Africa could top $2.5 billion by 2025, which is still a paltry 0.1% of the global market. Suffice it to state that this means more innovative entrepreneurs raising growth capital while creating more jobs – both positive for the economy, especially the underserved communities.

Digging beyond the numbers

“monieworx® has broadened participation in a very significant way”, said Lanre Showunmi, Director and Co-founder of Obelix. “Debt is the safety part in a portfolio, and monieworx is best positioned to become the dominant portal through which small-ticket investors enter the debt capital market. This reinforces our aspiration to make investing fair, accessible, and inclusive”.

“SME financing is at an inflexion point. We have been presented with a once-in-a-lifetime opportunity to win customer primacy and we intend to seize it. Overall, we expect owning alternative investments to become increasingly valuable”, said the CEO, Ali Yakubu-Concern.

“It is said that regulation is how you cap risk”, stated Titus Akintola, the Chief Compliance Officer. “This forms the building block in our plan to build a global layer of services for small and medium enterprises”, he added. We aspire to adopt a safety-first approach in delivering on our “Better – Faster – Cheaper” service charter.

“This is a critical step in our quest to build technology that can create a single Capital Market”, said the Chief Technology Officer, Salvation Arinze. “We are an innovative provider of online retail and SME financial and lifestyle services. This successful funding round on monieworx® draws a direct link between the online and the real-world ecosystem and is hard evidence that the platform is a genuine pioneer in debt crowdfunding through securities in Africa”.

“Debt crowdfunding presents us with a unique opportunity to access growth capital leveraging alternate financing options that are non-dilutive and founder-friendly by design, on the one part and provides an incentive for the communities in which we operate to get involved through co-creation of value, on the other part”, said Osaretin Sule, the Chief Operating Officer at Imose Technologies Limited. “This way, the local economies become more resilient”.

“There is 100% custody of funds and investment contracts through an arrangement with First Bank, Nigeria’s oldest bank that is registered with Nigeria’s SEC to be a Custodian Bank”, said Abubakar Maibe, Director at Alatiron Nigeria. “This reinforces our confidence and lessens the administrative burden imposed on fundraisers by the Investment Crowdfunding Rules, 2021”.

“We went to Obelix first over the traditional banks”, said Eunice Adeyemi, the Creative Director at Q21 Solutions. monieworx® hosted our debt-based securities with more favorable terms, lower interest rates, quicker approval times, and a simpler application process”.

About Obelix 4.1.1 Alternative Finance Ltd.

Obelix is an investment-based regulation crowdfunding intermediary incorporated in Nigeria on August 1, 2021, and the operator of a debt-based funding portal branded monieworx®. The company is licensed under the Investments and Securities Act (ISA) and is regulated by the Securities and Exchange Commission (SEC) of Nigeria effective December 1, 2022.

Its stated objective is to orchestrate an economic exchange and multilayered ecosystem of new sustainable opportunities in Africa. For more information on Obelix's journey, connect with us on our website or social media (handle: our_monieworx), where the most promising SMEs and like-minded investors learn from and support each other, which gave birth to monieworx’s tagline of “People Investing in People”.

Obelix is widely recognized as the poster child of regulation crowdfunding (Reg CF) and the SME-focused financier of the first choice in Nigeria. Crowdfunding is proving itself as a financial solution that speaks to the largest numbers through its simplicity, its transparency, and the service it provides to the local economy and to projects that are meaningful for retail investors.

Cautionary Statement Regarding Forward-Looking Information

Historical results are not indications of future results. Certain of the statements contained in this news release may be statements of future expectations and other forward-looking statements that are based on Obelix’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements.

The forward-looking statements contained in this announcement speak only as of the date hereof. Obelix expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking information contained in this announcement. Certain information was obtained from sources that it believes to be reliable; however, Obelix does not guarantee the accuracy or completeness of any information obtained from any third party.

Editor's Note: This content was supplied by Obelix marketing team.

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