How we give loans at Lagos Trust Fund – LSETF boss

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The chief executive officer of the Lagos State Employment Trust Fund (LSETF), Mr Akintunde Oyebode, has been speaking on the activities of the Fund so far.

Below are some of the information on the loan facilities and profile of the Fund.

He stated: We lend to both micro and small businesses and in total, today, we have disbursed N4.8 billion to 5, 816 beneficiaries, but we have approved a lot more than that and we are presently going through the next phase of disbursement. We have approved N6.5 billion to 9,938 beneficiaries. In most instances, I would say 90 per cent of the beneficiaries are micro enterprises and as you can imagine in terms of the amount, they take about 45 per cent of the loan amount because they need a much smaller loan amount for their businesses.

 

In LSETF, we dont discriminate. We lend you money from as low as N40,000 to as much as N5 million but of course, if you want to take a loan of over N500,000, you must have a registered business, two guarantors, and show evidence that you have paid taxes. You must be a lot more formalised than a business that is asking for a loan of say N300,000.

 

Why our interest rate is low

We are a state institution. If you take a look at the banks today, they take money from depositors. In many instances, if you put money in fixed deposit at 12 per cent, for the banks to make a profit, they must lend at 12 percent plus X. LSETF is being funded primarily by the government and we also accept donations from well meaning individuals and corporate associations, so, we dont carry cost of funds, which is a very major cost.

Also, we are operating from one main location and our other liaison offices are within local government and we also dont carry some infrastructure costs like branch extensions that banks carry.

So, from the cost perspective, we operate a low cost model and our role is not necessarily to be profitable but we have kept our operations to ensure that it is sustainable. We are more sustainability focused than a profit oriented institution.

Raising funds from CBN

We are currently speaking with the Central Bank on a number of collaborative opportunities. Talks are in a very advanced stage and we are about to pilot something with their Bankers Committee. CBN is a very strong ally and we are talking to the Development Finance department of the body and I see a very productive partnership coming out of that. You will also remember that we have already started doing some works and we can demonstrate the effectiveness.

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