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10 reasons why I’ve fired my staff

Being a boss is hard. But the hardest part may be letting people off when they don’t fit in. What constitutes “fit-in” is neither here nor there.

Here are 10 of the common “get the hell out of my office” lines I’ve ever used:

#1 I need to find myself

At some point in my life, I was so tired of being the boss. I didn’t want to keep being responsible for people and giving instructions. Everyone was so dependent on me, and I couldn’t keep doing that. It was suffocating. I needed some time to figure out what I wanted to do next and just catch a breath, so naturally, someone had to get fired. 

No, they didn’t do anything wrong. Their presence was just stifling me, and I couldn’t think. I was simply wrong for them at that time. It really was just a me problem but it’s too bad they had to pay the price. I hope they’re okay wherever they are now.

#2 My girlfriend doesn’t like you

Relationships are way more important than work and I would rather spend all my time with those I love than spend a few hours of my day with some people trying to do big things and solve problems. Work was taking up too much of my time. 

“Madam” absolutely resented the people I work with, most of all, my team leads with whom I spent most of my time. You know the saying, “happy (almost) wife, happy life”? I chose to be happy. My team leads needed to go. I’m sure they understood. 

Life is too fleeting not to chase love, whatever the cost.

#3 You don’t respect my boundaries

I had employees who kept calling me whenever customers had issues that needed to be resolved urgently. They insisted these were emergencies and keeping the customers satisfied was vital to keeping the company alive. 

It’s my company after all, I know what’s best for it. The customers can always wait till tomorrow. But you know who I couldn’t make room for tomorrow? The employees who disturbed my peace. I would have done a great disservice to myself if I didn’t fire them. Of course, I care about my customers, but not enough to sacrifice my boundaries. 

#4 I’m not getting value for this role

From time to time, employees talk about an increase in their salaries for a cost of living adjustment. What about me? Well, I decided to do a ‘cost-of-employing-you’ adjustment and I adjusted that to zero. It wasn’t my fault. The economy backed me in a corner and they needed to go. 

#5 You’re boring

If I’m going to devote my life to working with people, the least they can do is be interesting. Do you get the ‘ick’ about some people? When you can’t really put your finger on it but you just know you don’t like being around them. It’s too tedious.

It doesn’t matter if we’re doing serious business at work, you need to loosen up and make it your priority to be lively at work before anything else. Is that too much to ask? Ugh! Well some people gave me the ‘ick’ and I gave them the boot. Good riddance!

#6 You work too hard

I’m well aware that the purpose of coming to work is to … well, work but some people take it too seriously. Why would they work for hours on end and expect me to do the same? I don’t appreciate being nudged or having discipline forced down my throat. I prefer to work on my own terms and no, I don’t care if anyone is waiting on me. 

It’s just work. It can wait. Sheesh. Relax and live a little.

#7 You’re not a good friend

A lot of people like to say work is impersonal and the people you meet there are just your colleagues. That’s a whole lot of cow dung. If I’m going to spend about 8 hours a day, 5 days a week for about 40 years of my life with a bunch of people, we are family. I don’t care what the DNA results say. 

I employed them and I expect them to be good friends and stick with me through thick and thin. I need to feel excited to talk to them and above all, they need to understand me when I’m having a bad day and not hold me accountable. 

I’ve fired anyone who has been the opposite of this. I don’t have time for nonsense. Get an attitude adjustment.

#8 You do exactly what the company needs

This one really does my head in. Do you know how frustrating it is to work with oversabi people? I employed them to do A, why would they add B even though it’s absolutely necessary? They’re just employees. It’s not their business if the company will suffer when they don’t pitch in. 

I don’t like people who don’t know how to stick to their lane. 

Ewww. 

It’s no surprise when I want them gone. 

#9 God told me to let you off

I didn’t create myself so life isn’t always all about what I want but rather, what my creator commands. A few times, something about an employee just didn’t sit right with me. I tried to ignore that feeling but it just wouldn’t quit and I knew what I had to do. 

I felt so strongly in my Spirit that they had to go and I did the only thing I could do and fired them.

Who am I to say no when God says yes?

#10 You get upset when I’m being a bad boss

So what if I don’t pay their salaries for 3 months? Or what if I ignore my executive duties or deliver mediocre results? Why do they get so upset? Life is not that hard and I’m not perfect. 

My advice to them is to grow thicker skin and be more tolerant. And of course to get the hell out of my office. 

They don’t have what it takes to be here.

————

I know I have an enviable amount of self control and some of you have even fired people for less. I like to give people time to do the right thing but I can’t wait forever. I’m running a business, not “Adedeji Olowe’s halfway house for lost staff”. 

If I haven’t made it clear enough, my ideal staff consists of fun, lively individuals who don’t take work too seriously; do the bare minimum; don’t bother me with customer issues no matter how urgent; cater to my every mood and emotion; are willing to work for free, and of course, are thoroughly liked by my girlfriend.

What do you think? 

Absolutely RIDICULOUS right?!

Well that’s exactly how it sounds when employees quit their jobs AKA fire their bosses because they need to go “find themselves” or work isn’t “fun” or they get critical feedback for a poorly done job.

It’s work, not Disneyland. 

The reasons I’ve shared with you are actual real life reasons (some paraphrased, of course) that my staff have quit. Although I’ve seen this happen quite a number of times, it still shocks me everytime. It takes grit and discipline to build something valuable that will stand the test of time. It’s no easy feat and it’s definitely not for the faint-hearted. 

I can’t even count the number of times I’ve been left high and dry for reasons I still can’t make sense till today. Employees tend to be so focused on what’s going on with them that they forget that their employers are human beings too.

If I acted on my every whim, where would we even be?

Posted 28 September 2023 † dejiolowe § Piscalux ‡ Comments (0) °

Delights, dangers, and disappointments of remote work

Remote work or Work From home (WFM) is either the biggest blessing or the craziest curse to hit the professional landscape in the last 50 years. Before you scream your opinion, just know that views depend on who is making an opinion.

The impact of remote work on the global work culture has been undeniable. I think it’s just as transformative as the advent of cloud computing which allowed startups to work their magic. Who would have known Stripe, Paystack, Moniepoint without the ease of launching scrappy startups from the cloud?

Then the COVID-19 worldwide lockdown happened. 

And then individuals and organizations came to realize they could do so much more from their homes– the world unlocked a new realm of possibilities that had been hiding just under our noses.

There are only two kinds of people left in this world

It’s been three years since remote work became as normal as working from the office and now there are two kinds of people left in this world: those who want to work from home and those who want to return to their offices. A subset under those who want to work from the office is those who can’t even work from home to start with because they don’t have the means.This is prevalent in Africa where constant power and affordable stable-internet access is a daily miracle.

Some even pray for this 😞. 

The argument of whether or not it’s time to return to the office or if life can continue with remote work is one in which there’s some merit on all sides. Remote work introduces a much appreciated flexibility and, in many cases, boosts productivity, especially in cities like Lagos where long commutes are a norm. There’s no such thing as a 9-5 job in Lagos. 5-9 is a more accurate description for the average Lagosian when one considers travel time to and from work and traffic conditions. Personally, there are some places I dread going to in Lagos for fear of growing old and missing the birth of my grandchildren because I’m stuck in traffic. 

Alternatively, for those pushing to go back to the office, they’ve probably measured their productivity in both situations and determined they’re better off with traditional office-based work. Access to power, internet and no screaming family members or daytime chores? Can we really blame them?

Don’t even start with annoying parents who send their grown kids on errands during work hours.

Hybrid work presents a middle ground and has its own benefits. Sometimes, being able to meet up with colleagues physically just makes sense. Teams are able to balance virtual interactions with occasional in-person collaboration.

As much as there are merits to all sides of the arguments, some professions don’t have the luxury of choice. For instance, pilots, air hostesses, logistics agents, etc. Try being a dispatch rider from home and see how that works out for you. 

If remote work met the love of its life and had a poster child, it’ll be me

There are people like me for whom remote work has done wonders and fueled innovation and growth. Without the opportunity to remote work, my Lending-as-a-Service (LaaS) startup, Lendsqr, wouldn’t exist and I probably wouldn’t be configured the way I am right now.

Obviously, I had to do Lendsqr by the side when I had a corporate job but it wasn’t scaling. I barely had time to check on it and it stayed a tiny operation on the road to who knows where not. Then the COVID-19 lockdown happened and suddenly I could do it all. I could tap into a diverse pool of talent across Nigeria, work from home and work for as long as possible. Additionally, I didn’t have to hide what I was doing in the office. 

That was how Lendsqr grew. 

This isn’t unique to Lendsqr alone. That’s how a lot of companies flourished between 2020 and now. Of course, some others had been working remotely even before then but it was a relatively new development to much of the world.

Remote work is a great color on my company, Lendsqr

During one of my recent travels, I met a bunch of founders and business owners who all had offices in Nigeria at one time but had to shut them all down because the cost of running those spaces was unreasonable. That’s just the reality of trying to run a business from physical offices. In the last few years, the price of everything has gone up: diesel, petrol, rent, etc. For large organizations with big business and cash flow, perhaps the price hikes have been manageable. But not so much for small operations. 

Lendsqr isn’t profitable yet (sadly) but if we had decided to operate from a physical office, we probably wouldn’t exist anymore. 

Last year, I considered using one of my apartments as Lendsqr’s office and after looking at what it would cost to set the place up into a really nice office, I just didn’t think it was worth it. That money would have been better spent on salaries for the next few months. The opportunity to work remotely has allowed us to significantly reduce operational costs and redirect our funds towards growth and employee wellness.

One of the blessings I’m most grateful for operating remotely hasn’t even been the cost savings. It’s the opportunity to have discovered a few young people that have been extremely amazing.

In Lendsqr, access to quality talent is one of the benefits we enjoy from operating remotely. If we weren’t operating remotely, we would need to have an office and by extension, only be able to employ only people who could easily get to the office. This would limit our recruitment to a very narrow geographical area.

Some of the best people that have worked in Lendsqr have been from all over Nigeria: Abuja, Kaduna, Port Harcourt, Benin, etc. These are people who would have never been able to come work with us if we didn’t operate remotely and Lendsqr would have been forced to compete in a very narrow space.

I’m sure we can all agree that the flexibility from working remotely is also unmatched. My staff can jump on different projects throughout the day and take a nap to recharge as well. Yes, we sleep at work … but with sense. They don’t need to sit in traffic for hours or think about getting robbed on the way to work. They also don’t need to worry about getting to work tired or coming to the office smelling like petrol and fumes (sorry guys, but it’s true) from commuting. Uber is out of the question of course, that’s expensive for most and not sustainable for all.

If Lendsqr had a voice, it’ll probably curse remote work sometimes too

Operating remotely also comes with its own significant pains, of course. The most obvious one is that employee retention becomes a concern. Wait. Don’t jump to the conclusion that it’s because I’m impossible to work with. Those who’ve stuck with me the longest are actually the ones who’ve seen even the worst of me. 

Virtual meetings are a pain; video meetings are a curse. They drain you so deeply you are more tired than a 70 year old running a marathon the first time. It never ends well.  

The real reason is that with remote work, the ease of exploring alternative employment opportunities is frictionless. They can jump on calls, take interviews, and close new jobs without breaking a sweat. This would have been incredibly difficult to do if they were working out of an office. If you don’t agree, do your next interview in your current company open-plan office and then let me know how unemployment is treating you.

Also, there are some issues with the quality of work. It takes longer to get some things done with the communication barriers and longer review cycles. These are things that would probably only take a couple of minutes to refine if we could just stroll into each other’s offices. Don’t even mention how difficult it is to have decent conversations via chat when your colleague takes 57 minutes to reply to each message.

It’s not the common view but working remotely actually demands more discipline and not a lot of people have it. People can tell you they’re working on something already meanwhile they haven’t even opened the brief. Guess what? There’s nothing one can do about it. 

I see the lack of discipline a lot with young people who usually have a hard time fitting in. But you can’t blame them at all! 

You have green talent, fresh out of school, have never worked before and they come into a remote job. How do they make themselves sit at a desk everyday and do the work without being pushed? Many get distracted with domestic responsibilities, seeing friends, playing games, binge-watching series, etc. You can get on a call and ask people to turn on their videos only to discover someone has been on the road somewhere doing something completely unrelated to work. 

Everyone knows this can’t happen when you work physically and no one gets to go home until the day’s work is actually done. With remote work, someone says their internet isn’t working and poof everyone disappears. 

To each his own. I know my own.

Hybrid work seems to be the best and we’d have the chance to bond and connect more when we see each other physically. However, it’s not always practical. I can’t always get my designer in Kaduna, developer in Abuja or support person in Port Harcourt to come down to Lagos to work. 

Lendsqr will probably continue to operate remotely for a long time. However, I can’t ignore what I’m missing out on from not having a physical office. I wish we could be more stable. The attrition rate is atrocious and we, myself included, could all benefit from being even more disciplined than we are now. Although, I do recognize that some people who work physically just pretend to be busy while they misuse theirs and company time gisting and doing other irrelevant things.

The reality is that remote work comes with many blessings and many curses. It’s up to you to decide which works best for you. I won’t recommend any approach to anyone because it depends on what you have the capacity to make work.

Just like cloud computing created the opportunity for startups to build things without having to actually build things, remote work has created the opportunity for serious-minded people to build beautiful careers. 

Above all, do what works best for you. I know I am.

Posted 18 September 2023 † dejiolowe § Piscalux ‡ Comments (0) °

Look before you leap: A practical guide for those who want to work in startups

Startups have undeniably fueled global economic growth over the last 30 years. In Africa, success stories like Paystack, Moniepoint, and Piggyvest have demonstrated the value startups can create. The irresistible allure of startups, driven by their achievements, entices many to join their ranks.

However, here’s the question, “is everyone truly cut out to work in a startup?”

Focusing on successful startups alone is like admiring a pretty, healthy child without acknowledging the traumatizing birthing experience for the mother and the challenging journey that led to their growth. Startups can be likened to sperm cells; billions of them are produced but only very few are fertilized and end up becoming children. In the same vein, startups emerge from a myriad of ideas, yet only a fraction possess the potential to flourish and only a handful of passionate individuals believe so deeply in their viability that they bring these ideas to life as companies. 

Startups are built on rocky ground

Building a startup is extremely hard and the odds of success are strikingly low . Statistics show that 90% of startups fail. The stories we hear of successful startups are compelling, but the incredibly painful journey and exhaustive effort behind their success often remain untold — after all, these stories don’t exactly fit the glamorous narrative. 

For job aspirants, it’s easy to romanticize startups, envisioning young people like them accomplishing remarkable things. They believe in their own potential and aspire to contribute meaningfully to the cause. Or it could even be that their pastor told them they’re destined for greatness and they want in on that ASAP. 

Work-life balance who? Sorry, she doesn’t work here!

Reality check: over 95% of individuals who join a startup without a clear understanding of the demands end up regretting their decision. Note, this doesn’t imply that 95% of startup employees experience regret, but rather those who plunge into the startup world unaware. So, a word of advice— people, do your research! However, since you’re already here, let me be nice and give you a glimpse into what lies ahead. 

Imagine running up a moving escalator that’s heading down.

Yes, that’s exactly what building and working in a startup feels like —exhilarating if you make it to the top, yet spectators don’t understand your struggles and some may even think you’re crazy for trying.

Now, back to my analogy on startups and child-rearing. Working in a startup is a lot like raising a baby; they’re cute and they coo, and people love to look at them and pinch their cheeks but the reality behind closed doors is far from ideal. They pee, poo whenever, scream like banshees, fall ill a lot and don’t grow fast enough.They demand an enormous amount of effort but most of that stuff, however, isn’t visible to outsiders.

Working in a startup is immensely challenging. Work-life balance? That idea might need to take a backseat, at least in the initial stages. If you try to balance work and personal life in a startup, you won’t be successful in either; you’ll struggle at work and your life won’t be balanced. And that’s not a curse.

Hold on, before you come for me,I’m not discrediting the importance of work-life balance. Eventually, the “child” will grow up and maybe even end up taking care of the parent; but there’s an initial stage of dedication that’s necessary for the future well-being of all involved.That’s the same way it is with a startup. There’s no work-life balance at the early stages; not until the startup achieves stability and success and grows enough to accommodate it. 

Much like parenting, a startup becomes your life, but only temporarily.  If you grind hard at it and the start up becomes successful, then you have the chance to be recompensed for all you put in. Ask any parent who sacrificed for their children’s future—their sacrifice pays off over time.

Reality check: leave startups alone if this is you

Let’s pause and answer a brief questionnaire:

  • Do rigid boundaries and structured roles appeal to you? – If you were employed to do A, you must not be asked to do B.
  • Do you struggle with health issues like high blood pressure, etc.?
  • Can you work and adapt quickly to rapid changes?
  • Can you handle high-pressure situations?

If you answered yes to any of the first two questions and no to the last two, please go back home; working in a startup isn’t for you.

Startups aren’t for the faint-hearted

The glory of a successful startup is enviable but one has to be fully aware of what it takes to get there. It’s unfair, deceptive and downright reckless to enter a startup if you don’t have the mental fortitude required. You will definitely fail and maybe even endanger the entire company if you fail epically enough. 

It’s equally misguided to request a founder to slow down for the sake of your work-life balance. Doing so could spell doom for the startup.You either agree to do that mad job to raise the startup ‘child’ or don’t get into it. It can destroy you if you don’t have the fortitude to get through it. 

I’m not trying to glorify pain, I’m simply telling what it takes to build something great.

So what do you do if you get in and realize you can’t cope with it? Leave!  The nature of the startup won’t change to accommodate your preferences. If the startup slows down for you to give you that time you want, that startup will die a miserable death. You have to ask yourself: do you want to leave the job or do you want to destroy the company? There’s no other way. If an alternative exists other than full commitment, then it’s not a startup.

Startups aren’t the only fertile ground for greatness …

As much as I’ve spoken about how much strength and determination it takes to thrive in a startup, does this mean you can only achieve greatness in a startup? Not at all.

If you’re good at your job and are responsible with what you do, you can find yourself work in an established organization and build an awesome career. For instance, if you work in a bank, that means the possibility of getting promoted every two years with a salary bump and if you’re diligent, you move up faster. The same applies to opportunities for growth and advancement if you decide to work for the government.

The point is that you don’t need to contort yourself to fit in a startup or try to disrupt the workflow there, you can go somewhere else your talents are appreciated and you can truly shine. What is it they say, go where you’re loved (as you are)? Yes, do that.

… But here’s the greatness you can achieve in a startup

I do hope I’ve not tarnished the image of startups as modern-day boogeymen. Yes, it’s hard work, but it’s greatly rewarding. Now, let’s address the question: “What’s in it for me if I commit to a startup?” The short answer: fulfillment and financial success.

You know that feeling you get when you finally get that broken thing in your house to work again after trying for what felt like forever? Just hold on to that feeling and multiply it tenfold.That’s the bliss and pride that surfaces when a startup finally overcomes its challenges and breaks into success. 

In a startup, solving the problems might feel a lot like having to find the right key to unlock say 5 doors from a bowl containing 156 different keys. And no, the keys aren’t labeled or tagged. So it’s only fair those who are around long enough to make it work win and win big. 

For those who stay and decide to build a startup to success, no one can take away the satisfaction of conquering a million and one obstacles. Also, unlike most established organizations, startup employees handle huge amounts of responsibility and are able to see a more direct relationship between their decisions and the impact on the company and customer satisfaction.

If ever there was a “Jack of all trades, master of one, novice of none”, it’ll probably be in reference to startup employees. The solutions required in a “baby” company are varied and often require employees to know a lot about everything in addition to their core area of expertise.This presents a unique opportunity for both wider and deeper learning and what the younger employees may not have in years of experience, they make up for in depth of experience. It’s little wonder that startup employees are often rewarded with a stake in the company. 

Finally, for the million dollar question, “will I get my life back?” The answer is a big fat YES. Work-life balance will come naturally when the bulk of the work has been done and dusted and all that’s left is to watch the company flourish. The great thing is by this time, most of the stuff works on autopilot anyway but that’s only because you already poured blood, sweat and tears to make it great.

New beginnings are wonderful, but we can’t get carried away with the pretty stories and forget that it’s back-breaking labor that births greatness.

Posted 14 August 2023 † dejiolowe § Piscalux ‡ Comments (1) °

Tinubu’s student loan plan is great. But there is a better way to do it.

The Federal Government of Nigeria recently signed the Student Loans (Access to Higher Education Act, 2023 into law. This is a big step in the right direction of providing affordable credit for all Nigerians. Nigeria can’t grow without credit – that’s a fact. 

Only a little over 1% of Nigerians are successfully enrolled in a higher education institution and we can’t pretend not to know that the major barrier to accessing higher education for the majority of Nigerians is simply that they can’t afford it. What the Government has done now is to provide a solution to significantly lower that barrier for indigent Nigerians and empower their future through education, to be more productive members of the society. What’s more? These student loans are interest-free; at least for now. 

This is definitely commendable. 

However, with the way the student loan scheme is currently set up, it might just be destined for disaster. The strict criteria and paperwork required are quite unrealistic for the less privileged students these loans are targeted at. For instance, to qualify for the loan, applicants need to prove that their household income is less than N500,000 per annum or N47,000 per month. This means bank statements and maybe even tax clearance certificates. Needless to say, this poses a problem for low income households who mostly work low paying blue collar jobs or engage in petty trading and remain outside the formal financial sector.

In addition to this, applicants are required to provide at least two guarantors from a limited list of: a level 12 civil servant, a lawyer with 10 years post-call experience, a judicial officer or a justice of peace. The chances that the poor families run in the same circles with these people are slim to none. Even if these requirements are somehow met, there’s no certainty that the loans will be granted as they are subject to the availability of Government funds. These are some of the concerns with the current student loan plan.

This way will fail. Miserably.

Why is it important to ensure the student loan scheme works?

Student loans will secure the future of Nigeria with talent and allow the economy to grow at a sustainable pace. The impact would be felt within a maximum of four years with the fresh graduates’ entrance into the labor market. The labor market will be set to receive an inflow of better qualified job seekers. There might not be enough jobs right now but there’s equally a shortage of talent in the labor market.

Naturally, a reduction in crime will be expected to follow. Educated students are more likely to get jobs and create value than risk their lives or freedom for crime. Even the rent-seeking activities and the entitlement it breeds amongst our young people will see a decline.

With better education and an accompanying improvement in the standard of living, Nigeria will see a rise in our currently poor human development index (HDI) score.

An uneducated Nigeria in 10 years will be a disaster of epic global level.

Is there a better way this could be done?

This is too good an opportunity to pass up or botch. Here are a few ideas that could be implemented to improve the way the student loans will run:

There should be a student loan financing scheme which students, regardless of their parents’ income, can access as long as they meet the schools’ admission requirements. This way, there is much more focus on the ability and merit of the students rather than their parents’ circumstances. This also means it shouldn’t be limited to the poorest students alone. 

This financing can be processed through the universities. The universities, upon acceptance of a qualified candidate, can apply for financing on their behalf. Of course, the universities must also meet a certain standard that assures financiers that the student will receive a quality education that increases their chances for success upon graduation. In view of this, the financing may be restricted to certain courses for which job opportunities are readily available. This helps to manage the risks associated with repayment down the line.

Additionally, transferring the responsibility of financing the loans to the existing private banks takes care of the “disbursement is subject to the availability of funds” clause. Public-private sector partnership can go a long way in ensuring the success of this initiative.

Involving the banks means students may also have the option of securing their admission first and processing the financing through the banks. The only role the Government might play in this is to back the loans; to guarantee the loans in a sense, so the banks can lend confidently.

Essentially, what this is what this could look like: Student Lagbaja gets admitted into ABC university and informs the university he would like to finance his studies via a student loan. He fills out an application for the student loan at the university and the university submits this request to a bank they would have partnered with for this purpose. The university assures the financier that the student is enrolled in an accredited program for a specific duration and they will receive quality academic instruction. Student Lagbaja’s fees are covered by the bank and that’s it. He can go into the world and succeed. And of course, start repaying the loan when due.

What are the benefits of implementing the student loan plan this way?

Let’s get straight into it: 

The first benefit is that this way, the loans can be allocated with merit at the heart of the requirements. Enforcing a minimum standard of academic excellence to access the student loans also ensures that only the students with the best future prospects benefit.

The need for guarantors becomes irrelevant  and this removes the classist implications of the current requirements of such out -of-reach high-ranking officials as guarantors.

Another benefit of this approach is that students can take responsibility for this process without involving their parents, who may be unable to help because they don’t have the resources or an understanding of what’s required of them.

Finally, a more efficient loan distribution network can be established through the banks. This removes the possibility of the process being held back by Government inefficiency, bureaucratic red tape and corruption.

What’s the assurance that this approach would work better?

It’s quite simple really. Banks are more effective with lending and loan recovery. We can’t forget that the Government already tried student loans in the 1970s and had to abandon the efforts when they couldn’t hold people accountable when it came to repayment.

Universities would also be forced to improve their offerings and facilities to be able to onboard more students who can attend on loan.

The final question to answer after considering all these is perhaps the question of how the Government will ensure the loans are cheap? Interest-free loans start and end with the Government. Incentives such as tax write backs would work quite well here to make lending attractive to the financiers and keep the loans at maybe even single digit interest rates.

I’ll give the current student loan plan an A for effort, but the follow-through is in danger if they decide to go ahead without making adjustments. At a time like this, let’s hope the Government hears the people and acts accordingly.

Posted 16 July 2023 † dejiolowe § Piscalux ‡ Comments (0) °

Without access to credit for everyone, Nigeria can’t hit the growth it wants

Let’s start with a story about Bimpe and Uche. Bimpe, a graduate of Sociology from the University of Lagos, is working an underpaying job with no growth prospects. With a salary of N100,000 and more mouths to feed than she could afford, Bimpe was miserable. She couldn’t continue living that way and she decided to start a business. The thing is, Bimpe is a very talented seamstress with a flair for sassy African fashion you see on Instagram, and you go like “whoa!” She could easily earn a lot focusing on couture full time, but she needs about N800,000 to start. She barely had N5,000 at the end of the month after all necessary expenses. Where would she get N800,000 from?!

She tried to save aggressively but life kept getting in the way and it was nearly impossible. She had nowhere to turn to get a loan that size either. Her numerous but failed efforts to gather the funds she needed made her burnout and less focused at work. She lost her job and had to resort to petty trading, barely making ends meet. 

Uche’s story is a little different. Uche didn’t have the opportunity of attending university like Bimpe. However, he did have the opportunity of an apprenticeship with his uncle who owns a logistics business and all Uche wanted was to start his own logistics company after his ‘freedom’. After a couple of years Uche was finally free and then his eyes cleared when he realized he was so focused on learning how to grow his own business that he forgot the ‘seed’ he needs to grow his business isn’t the kind you find easily.

Well, Uche’s seed came in the form of a loan from his cooperative and he bought his first two dispatch bikes for his logistics business. Within 10 years, Uche’s business grew exponentially and he’s now a big man with many delivery bikes, buses and even trucks for nationwide delivery. 

Credit saves.

A loan saved Uche. And most likely many others who could only afford to build good lives through the thousands of jobs Uche created through his business. Now imagine if a million Uches got loans like that and built a million successful businesses. Imagine if some other Uches didn’t even have to wait and could get loans to go to school and get good jobs. Enough with the daydreaming, back to reality: Bimpe. Bimpe whose promising life was completely derailed because she couldn’t access a loan or any line of credit. 

The fact remains credit completely transforms anything it touches and it’s essential to grow any economy. Without credit, growth is limited; stifled even. Every N1 injected into the economy has the potential to create 10x value. This phenomenon is known as the ‘multiplier effect’. 

What is the multiplier effect?

I won’t bore you with the technical jargons; let’s leave that for the economists. For the purpose of my crusade for credit, the gist of it is that for every injection (investments, capital expenditure, etc) into the economy, there’s an amplified ripple effect on the value and income generated within that economy. 

Think about this: you’re on your way back home after a long day at work and hunger pangs are flogging you worse than your primary school teacher! A woman selling roasted plantain by the roadside comes to your rescue (not all heroes wear capes, some tie wrapper) and you pay for the goods. You have not only put money in the hands of the roasted plantain seller, you have also put money in the hands of her plantain supplier, who in turn puts money in the hands of the farmer and even the delivery truck driver and offloaders. The list goes on. Everyone makes money. That’s what the multiplier effect is.

So should Nigeria miss out on this potential for prosperity because people don’t have money right away? That’s absurd. 

Give them money to build their dreams! 

Let’s pump credit into education and reap prosperity for everyone

Only about 1% of Nigerians are in the universities. I’m sure if we were to conduct a study to find out the relationship between the level of education of Nigerians and the poverty rate, we’d discover they are married with three children. 

There are a few barriers to getting a quality tertiary education in Nigeria but the highest barrier of all is simply that people can’t afford it so they don’t bother. They focus on providing for themselves and their families instead. The sad truth is that this deprives them, and even their generations to come, of the chance to ever make it out of poverty. The poverty trap didn’t come here to play with anybody. 

There’s no denying that the student loan scheme in the US comes with its own wahala. Student loans in the US allow people who would never even have dreamed of a university education to attend some of the best schools in the world. The US’ global leadership is directly correlated to the quality of its education. Go figure!

Nigeria has now followed suit and introduced the Student Loan (Access to Higher Education) Act, 2023. Whether this is practical and sustainable remains to be seen but the idea is definitely welcome. With this, Nigerians can access quality education previously out of reach for so many. This could be pivotal to the quality of life for the beneficiaries’ generations to come.

With these loans, students get access to a good education; if they are focused and graduate with a good grade, they greatly increase their chances of landing a good paying job and living a productive and prosperous life. And guess what? The ability to earn the income they do over their lifetime can be directly traced to their access to credit. 

The logic applies too even if the student chooses to start a business after graduating. They create jobs for others, they pay taxes and they have more money for consumption. Those who benefit from the jobs they create also pay taxes and increase their consumption. Rinse. Repeat.

The deal gets even sweeter. Why? Because people with better lives are able to give their children better lives too. The value generated just keeps multiplying. Did I just solve the poverty trap or what??

The simple fact is, no great country has ever emerged without educated minds and the US leads the pack with robust financial support and credit for students. Without Nigerian funding education like our lives depends on it, we wouldn’t get anywhere.

Don’t turn off the money gun just yet: entrepreneurs need loans even more

It just makes sense to give money to people who have the capacity to grow it, doesn’t it?

Say an entrepreneur starts a business with a loan of N5 million. You know what this means for the economy? Jackpot. They create jobs. They purchase materials from suppliers. They pay consumption and corporate taxes. 

It doesn’t stop there. The suppliers are also able to create even more jobs with their increased income and every single one of them has to pay taxes to the government too. This same value chain is created even in small businesses. Remember the roasted plantain seller who saved you in traffic earlier? Take even the Uber drivers who take loans or take advantage of hire purchase options to buy a car and pay it off over some time. They’re big boys now o!

The fact is, everytime you give someone money, you empower them to create value. Cash injections end up becoming a powerful creative force to drive value creation in an economy many times over.

Credit. The gift that just keeps on giving. 

If credit is so great, who’s hoarding it and why?

The value the economy stands to benefit from accessible and affordable credit is apparent so where’s all the good credit? It’s there but lenders aren’t lending. Why? Because no one is  protecting them. We talk so much about borrower protection but if you hear the terrible things borrowers are doing to lenders on a daily basis, you’d quickly offer lenders a box of tissues for their hot tears.

Nigerians take loans and don’t pay back. This discourages lenders and forces them to limit the credit they offer to small ticket loans and high interest rates to account for their risk exposure. The problem here is that these kinds of loans are utterly useless to people who need a substantial cash injection to create significant value. 

The government needs to protect lenders too. They can’t expect to be able to meet the credit needs of over 200 million Nigerians alone. Or do they think they can? 

Nigeria isn’t the guinea pig and this isn’t an experiment. China did it already

If you want to know how effective credit is in transforming economies, just look at China. Their state-owned enterprises (SEOs) received low interest loans and the economic benefit was massive. With these loans, the SEOs were able to ensure economic stability, trigger substantial economic growth, reduce their unemployment rate and commit to undertaking large-scale infrastructure projects.

These loans came with their own challenges too but answer me this: Is China a superpower or no? 

Then that’s that about that.

Let’s even come back home to Nigeria. We’ve had economic miracles borne out of credit as well. Take Dangote and Otedola whom all the kids look up to. Despite hailing from wealth, Dangote took out a loan of N63 billion, inclusive of $75m from IFC, to build the Obajana cement factory. Otedola did the same with a much larger syndicated loan towards Zenon Petroleum and Gas in 2007. Even the telecoms giant, MTN, signed a loan deal for N200 billion just four years ago when it floated its shares on the stock market.

Dear Nigeria, think smart and think fast!

The case is clear for Nigeria.The Government needs to think smart and think fast.

For the Government to take heed and jumpstart the economy, here are a few no-nonsense but simple things they can do immediately:

The government should step in beyond borrower protection and protect lenders as well and encourage them to lend more. Of course, this should be done with recourse to checks that guide lending: ethical interest rates, due process, etc. 

The government can create a set of rules, regulated by the CBN that explicitly protects lenders without bureaucratic red tape: instead of lenders and borrowers dragging each other to court, lenders can report defaulters and get cooperation from defaulters’ banks to settle the loan. They should consider giving lenders access to use the global standing instruction (GSI) and putting it to much better use.

For the suggestion above to work, loans can be registered by lenders with a regulatory body and perhaps be given  a limit to what can be recovered on loans in default e.g lenders can only recover their principal, with no penalties or interest when a loan goes into default. In the same attitude of transparency, an increase in the interest rate must also be communicated to borrowers and the authorities ahead of time before implementation.This process should be seamless and possibly electronic.

In summary, if the government doesn’t use credit to leverage the economy, the exponential growth we so desperately need will never happen. The best time to start was years ago. The next best time is now.

Posted 08 July 2023 † dejiolowe § Piscalux ‡ Comments (0) °