Small-scale investors find new ways to survive hard times

Forum 7 years ago

Small-scale investors find new ways to survive hard times

As companies face hard times, retrenching workers and reducing overhead cost of production, one would have expected underground businesses to blossom, with these retrenched workers investing some of their monetised benefits in small-scale cottage ventures. Alas, this is not so, as this micro, but essential sector of the economy, is also starved of fund, making operators look in other directions to access the much-needed funds.

Henry Nwosu of Harry Chin Chin said the economy is biting hard, so much that microfinance organisations that are supposed to offer relief are aggravating things.

He said: “They sometimes increase interest rates to 20 per cent, making it extremely difficult for cottage producers, who depend on such capital to expand production lines. But because we have been in business for long and would not want to fold up, we seek help from any available avenue. These other sources are sometimes non-financial institutions, such as family, friendship clubs and even borrowing from people, who are afraid to invest their money, but rely on one’s business acumen to recoup their money.

“For instance, I have just secured a loan of N800, 000 from my town’s union and would pay it back in October, with seven per cent interest for six months. This means when I shall be paying back, the money would have increased from N800, 000 to N856, 000. It is only through this means that one can think of long-term projects, because it is a soft loan. But the opportunity is only opened to those they know are into production and have the integrity of paying back loans.”
Disclosing other means cottage outfit owners have devised to remain afloat in this hard time, when purchasing power is low and costs of raw materials are high, Nwosu said his organisation has adopted a hard marketing/selling drive to increase sales. According to him, instead of waiting for shop owners to come for their products, they go to them. They also go to those places, where they are sure of high patronage.

“We take note of different events, irrespective of the organisation behind them and then approach them to promote our products,” he explained. “Also, we have reduced the quantity of our products during packaging without reducing quality, as a way of meeting overhead cost of production and making profit.

“The measure of the normal N50 wrap of Chin Chin has dropped by two to three per cent, but we still sell at the normal price, so that we will not lose customers. Also, we have introduced some incentives, such as rewarding customers with certain per cent of bulk purchase in a month; this is to drive sales.”

For Aminatu Azeez, who is into fish farming, some people have the money, but do not know what to do with it. Some of them are even afraid of investing, because they are unsure of the returns, especially as government and its agents are in the habit of pulling down shops, arresting hawkers and street traders. So, she locates people with such idle fund, offers interests of five to eight per cent, and some times 10 per cent for a period of three to five months. Most times they jump at it, because it is like growing their idle fund.

She said: “I collect money from people, including friends, when I need to make very huge supplies, because the microfinance firms may foot-drag at such offers and I pay some interest, usually at a very low rate, compared to what the microfinance firms give. I have just finished paying a loan I collected to equip my farm for the various festivals in the year. I paid five per cent on every N100, 000. I am happy and the lenders are also happy, because we both made profits.”

Stressing that one has to be creative and dynamic to overcome the current economic hardship, Azeez said she has to look for other means of adding value to her business, such as drying some of the unsold stock. This, according to her, has opened up a new source of income, which was formerly neglected.

“I have been in the business for sometime, and I cannot leave it now