Small and Medium Scale Enterprises (SMEs) are typically defined as companies with revenues less than US$15 million per annum, total assets less than US$15 million or number of staff less than 250 people[1]. In market driven economies, SMEs play a crucial role as they typically account for a larger share of employment and GDP growth than large corporates. This is especially the case in the frontier and emerging markets of Sub-Saharan Africa(SSA). For example, Nigeria where 96% of businesses are SMEs according to the Central Bank of Nigeria (CBN).
SMEs in the SSA region have noticeably underperformed due to several key issues. This underperformance continues to severely constrain Nigeria’s economic growth and development. These key issues include poor governance, inadequate infrastructure, human capital constraints (e.g. low managerial and technical skills), historically low levels of regulatory ESG enforcement, etc.
However, the most pertinent issue identified is the lack of adequate and appropriate funding for these businesses – i.e. the funding gap. This funding gap presents a significant opportunity for investors who understand the local environment and possess the relationships to structure transactions that address the needs of SMEs. MBO Capital’s primary focus is to provide viable financing options for SMEs. Our success in helping companies hinges not only on our ability to provide the appropriate capital required, but also the business support that is necessary to tackle some of the other key issues.
[1] As Defined By The Central Bank Of Nigeria – April 5, 2017
Businesses that employ or can potentially employ a significant number of staff across a broad range of skill levels.
Businesses established by talented Nigerians who adapt to the local environment but maintain critical global business standards.
Businesses led by women or with a significant number of women in decision making positions. Businesses that improve women’s access to credit or provide goods and services specifically for the female gender.
Businesses with more than 50% of major inputs sourced locally. Local production of goods and services.
Businesses that generate foreign exchange by exporting products and/or services.
Identifying opportunities involves seeking out investees with significant growth potential and a viable path to exit.
Prioritise investments that provide significant opportunities to empower the economy, given the strong correlation between economic empowerment and poverty alleviation.
Take significant minority stakes in selected investment opportunities. Majority stakes may also be acquired depending on the value proposition.
We create value by implementing a clear business strategy for the portfolio company and strengthening managerial decision making within the company,
Monitor the progress of the portfolio company over the investment period and provide regular progress reports to our investment committee and investors.
Initiate predetermined exit strategies to ensure a timely return of invested capital while maximising returns.
MBO Capital Management Limited is regulated by the Securities and Exchange Commission of Nigeria and is authorized to act as a Private Equity Fund Manager.
