From CBN to Cooperatives: Funding Solutions for Nigerian Pharmacies

Hello and welcome to the show. Taking today's recording at my desk so we shouldn't have too many interruptions. Now, if this is your first time of discovering the podcast, don't worry, this is not a show about my life. The goal of this show is business education. So if by the time we're done with it, you find some value, please share, promote and talk about the show so that your friends and family members in Nigeria and abroad can benefit from the questions that we tackle.

They can do that by subscribing on Spotify, YouTube, Apple or any player of their choice. And if you in particular have any sales and marketing questions, then bring them to me. You can call, you can SMS me or you can send me a WhatsApp on 08064662140. Today on the show, I'd like to. OK, let me get my notes here. I'd like to tackle one question quickly. This was from Francis in Asokoro. She called in on the radio show.

This your first time listening to the podcast? I don't just have this podcast going. I also have a radio show where I tackle business questions then. OK, So Francis, her question was around what kind of grants or what kind of soft loans are available for people who want to start pharmacies or who run pharmacies, chemist business, you know, these sorts of things in Nigeria. So that's today's question. What kind of grants or what kind of soft loans can you expect to get if you are trying to run a pharmacy or a chemist business in Nigeria?

So let's see what else. So First off, I started off by giving the usual warnings, the usual caveats, especially for those of you who are starting businesses where, you know, health and safety is a primary concern. So I wanted to be sure that Francis has all the legal compliance in check, you know, registered by CAC, you have all your NAFDAQ certification, NAFDAF qualification, you have all your medical medical qualifications, what else, you know, everything that you need to do for these particular kinds of businesses.

So just make sure that if you're like Francis, you're about to start this business, just make sure that everything is in check. And before I continue, particularly since I started the radio show, I get the impression that lots of people think that the problem is, you know, finance, you know, funding, you know, stuff like that. And I've been saying it time and time again on the podcast and I'm also saying on the radio show.

But I think it's a gospel I'm going to have to go really hard on. For most people, the problem is not finance. You think that finance is your problem, but the problem is you're doing a bad job when it comes to sales and marketing because this is what is going to happen. You have your business, you have your pharmacy, you have your web design agency, you have your poultry business, you have your whatever. If your unit economics are wrong, unit economics just means have you priced this thing adequately so that the money that comes in, there's enough for you to put something in your pocket, there's enough for you to reinvest back into the business.

There's enough for this thing to, to, to keep going. So if the unit economics are wrong, the unit economics are wrong. So even if you go and raise 5 M and throw it into this business, the unit economics are crap. So the thing will still crumble. The only thing you're doing is you're just delaying the demise of your business. The problem that we should be fixing first of all is not funding, funding finance, finance. Finance is sales and marketing first.

Are people interested? Did I pick a right location? Am I able to move this product or serve? I mean, all these kinds of questions around sales and marketing, that's what we saw first before we go and get funding because some of you are just increasing your level of busy. If the business is a bad business or you don't know how to sell the thing or it's something that you probably have to move out of and get involved in another business.

The thing is if you go and raise 5M10M, I'll throw it down. This thing you just magnify your level of busy and you're just moving judgement day down the line. That five M, that 10 M, that 20 M, that 50 M, it will just buy you some time. But ultimately this thing will still crumble if you don't deal with the underlying issues. So please, you're listening to the show now. I beg stop thinking that funding is the problem.

Stop thinking that finance is the problem. In most cases is not how you know, look guy anyway, if you're running the business right and then things are moving, you have product market fit. Product market fit just means you've been able to establish that there's demand for this product. People like it, people are calling, people are buying you. You've been able to find a way to connect with your with your audiences, with your potential customers.

And then maybe the problem now is that you know, you need money to scale. You see that's a different problem. You've been able to fix the foundational elements first, first before you not worry about scaling. Anyway, let me not go into it rant. Let me just answer this question. But I just want lots of you to know, especially those of you discovering this podcast for the first time since I got on radio. There are too many people who think if I can just raise 5 M,

if I can just raise three M, if I can just raise 10 M, I'll be all right. Your problem is not the finance. The problem is that you've not been able to do a good job selling, marketing, finding customers, finding patronage, whatever it is you want to call it. That actually is the problem. So unfortunately for Francis now when she asked the question, I did a little bit of research and it looks like the finance that is available is probably too big for Francis or maybe too expensive the the kind of funding options that are available.

So there are commercial banks that have some kind of packages that people can take advantage of, like Sterling Bank for instance. They have this, at least at this at the date of recording in 2025. They have a health finance package for businesses where they finance working capital and then asset finance. Now what working capital means is you're already running the business, but you need some small coins, you need some kind money every day or every week to finance one or two things.

That's about working capital. Working capital means, so it doesn't mean big money to buy your building or your truck or your whatever, but the money that you need to do the work on the everyday. That's what working capital means. Then they also provide, OK, not just working capital but also asset finance. Now, asset finance, that's money that you use to get the big, big stuff, like to buy the machines or the, you know, equipment that you use in your chemist shop or maybe to acquire the building or whatever.

So Sterling Bank here, they have health finance. By the way, please, whenever I give any information here on the podcast, I beg go and verify. Don't take what I say as gospel truth. You know, I'm human, I can make mistakes. So go and verify the information. Yeah, shall go and verify anyway. Then I also found something from CBN that's the Central Bank of Nigeria. They have is healthcare sector intervention facility. That is the HSIF as of the time of recording in 2025.

If you're reading, if you're listening to this podcast in, you know, 2057, then, you know, go and check, find out what the, the, find out what the current program is. So this is CBN healthcare sector intervention facility HSIF where they provide credit. Credit just means loan means I've given you some money, but I will collect the money back. Let's see what else? OK, so they provide credits, but this is just to manufacturers.

So I don't think it will cover people like Francis because it looks to me like Francis is on the retail side, as in she's selling, not that she's manufacturing the medicine. Well, so they give credit facilities, that's loans to manufacturers and suppliers, I think for 10 years, Abby, OK, No, they give it to you at 9% for 10 years. Then there's also the Development Bank of Nigeria, that's the DBN. They also have some things there for people who are in healthcare space, you know, pharmacies, you know, things like that.

Then of course, there's also finance options that are available. If you try microfinance banks, that is where you can get some, you know, small, small loans, not, you know, gigantic, gigantic money. And I hear that the rates at microfinance banks are better than regular commercial banks, but still the average Nigerian still considers that to be expensive. Well, that's an option then. I also mentioned that, you know, there's still the age-old ISUSU

contribution cooperative, you know, all these sorts of things because like I mentioned, one of my family members who was able to raise I think like 3M or 4M for his own particular business needs. I didn't know that all these small, small associations that people join at work, you know, you know, so, so, so and so association of workers something something Children of Anambra, Emily S something, something cooperative. You know, I had no idea that all these institutions that you join and all these money that people are putting aside every month,

you know, I had no idea that at the end of the day, it can amount to those it can amount to anyway, Let me just say, if you had asked me before, can somebody join ISUSU or join Co-op? And then at the end of the day, raise, you know, like 3-4 million for their business. I would have said no, that those things are too small. How much are you putting aside? You won't pass, you know, 5050 K every month for a hundred 100K every month at the end of the year.

How much is that? You know, blah, blah, blah. But yes, more these things give good loans. So you can try and join some of those things. Then of course I also mentioned non interest financing or Islamic finance as some people like to call it. Don't worry, you don't have to be a Muslim to take advantage of these. So they have particular products that people like Francis can take advantage of. So in a general sense, you know,

you'd have to speak to the particular bank and the people in the sales and marketing department will let you know what's up. So I think OK, Nigeria, this Taj, this Taj Bank, what else? Taj Sterling Bank also has a non interest banking section. Sterling Taj, I can't remember which other banks, but please, like I said, I'm not affiliated with any of these institutions. So please go and verify for yourself. Don't take it that what I'm saying is gospel truth.

So there's a class of products called Mudaraba, which is profit sharing, where the bank will provide capital, the bank will give the money to be running this thing. Then you, in this case Francis, will take responsibility for managing the business. And then at the end of the day, the profits are shared in a fixed ratio. So Mudaraba, it might be something that, you know, some people are open to. So it's not as if you took a loan and you know, X percent every month or whatever.

You know this one is profit sharing then. Okay, I didn't note down the other products because I noticed that for this Mudaraba, there are three other banks in Nigeria that offer this particular product that is product sharing. So if you're curious, check your Google, check Gemini, check ChatGPT, Mudaraba is MUDARABAH, otherwise profit sharing or just Google non interest financing Nigeria. And you see some of the things come up.

So that if you are in this situation, you have a small pharmacy, you're trying to do some small chemist business or something and you need funds to get the business to to grow, then yeah, these are some of the things that you can use to help fund your business. However, like I keep telling people, and lots of people don't realize this, when you start looking down this route to collect money from some kind of financial institution, you will need a business plan.

You will need some kind of projection. In other words, you will need some serious paperwork. This is not something that you will go in and tell them your life story and they'll feel sorry for you and then they'll give you some cheddar does not work that way. Everything needs to be squared, needs to be proper, needs to be on point. I'm currently talking to someone like that who wants to raise equity finance. And then we start the conversation.

I'm like, you know, guy, you don't have you don't have anything like there's, there's no paperwork. Like how is somebody supposed to invest in your business at this stage? Like based on what? Just because you look nice, you sound nice, you sound educated. And then because other people will drop money doesn't work that way. So if you're seriously thinking this thing grants, investment, soft loan, hard loan, any kind of loan, any kind of equity, go and drop a business plan.

Just Google ChatGPT, see the templates, start following the templates. The important thing about the templates right is, is that it is a guide to what you should be paying attention to. So that's why all these templates are are useful. But of course, have someone look it over again by the time you're done. But sure, you will need a business plan and you will need your financials to be in order. So if you're like me that you like to harass your accountant by just throwing all the receipts to him, print our banks open.

I say, well, accountant, go ahead and figure this thing out. That's not going to work. You know, things have you have to be more point with keeping your records, tracking everything and you know, proper printed out statements, you know, every, every. So then when somebody asks, how much did you spend last year in 2025, you can say exactly how much. When they say how much did you need from working capital in the second quarter?

You can look at it. OK, second quarter, is this to this the working capital that I need needed to run the pharmacy, you know, was this is this and that amount or how much do you need for the next, you know, to finance the business for next year, As in you will need to have very, very, very, very clear answers. See, The thing is, even if your answer is not clear, even if it's not exact, even if it's not accurate, the very fact that there are some things that you can be looking to, to get the information.

These are the kind of things that inspire people with confidence. Because I've been on some some sessions where the head of I can't remember for Smedan or which organization. OK, no, Smedan doesn't give money, but one of these organizations that gives money and the person said that, you know, lots of people come forward and the paperwork is not, is not in order, you know, so there's no, there's no confidence. At least if they see that you are trying to tidy up the paperwork, there's something that they can refer to you give somebody small confidence that,

OK, this is something we can invest in or that we can drop money here. Anyway. So summary, what I just wanted to say, I don't want this episode to be too long is if you're in this kind of situation, please, please, please, please my own opinion or stop assuming that funding financing is the problem, sales and marketing is the problem. If your pharmacy business is struggling, I think it's probably because, see, I'm not in this space, but my guess is maybe if you have a pharmacy,

you need the right kind of location because you need access to food traffic or maybe close enough to hospitals or something. Because I noticed that close to National Hospital in Abuja that these there are three mega pharmacy chains there. So I'm assuming when it comes to pharmacy, location is the main thing, access to food traffic. So it's probable that, you know, you picked the wrong location or you're not, you've not done a good job with marketing your,

your pharmacy, letting people in the in the neighborhood know, letting establishments around know that you are around, even if you're small thing like dropping flyer. So that at least people who are working or living in other buildings know that, OK, if you have small malaria, there's this place where you can go and buy, combine, train or go and buy, you know, as more queen or you know, whatever queen or all those things.

Anyway, bottom line is let's let's assume that we have sales and marketing problems first, first, first, that we have problems with market access first, first, first, or that we have problems with product market fit Fest, fest, fest. We have not been able to find the customer. We've not been able to bring the customer to us. We've not been able to penetrate the market. We've not been able to pull the market to us. After we solve all these problems, then we can start worrying about finance problems.

But you still want to do finance? Yeah, the options available, a quick Google search or a quick ChatGPT search or something. We'll turn up some alternatives then remember, if you're going to go down this route, paperwork very, very important. Nobody's going to give you money based on personal recognition. So like I've been telling you guys, if any of you is connected with down with it, please hook a brother up. You know, I'd like to meet him,

you know, have a chat and I think me and he him can be very good friends. But The thing is when you actually hook up that recommendation to that introduction to down with me and him now we don't begin the flow. I can't just say down with a what's up now you help out your boy. I need like you know, like 30 M for my business. You know, it's not by me using mouth and just saying how far now that spot me 30 M that he will just drop the money like that now, you know except with me and he become like boys and it's like oh OK guy, let me just help you out.

Then he will just transfer like that. But you know, he's going to have to justify that spend somehow. So there has to be some paperwork on my own and to show that this my business plan is what I need the money for this one which investing this will be the returns. This is how much I'll pay you back, you know, things like that. So just no show if you must raise funds, you know, based on personal recognition, it's not based on packaging.

And anyway, let me stop here. So that's all for today, folks. If you have any sales or marketing questions in particular, bring them to me. You can call, you can SMS, you can WhatsApp me on 08064662140. Thank you very much for your time and attention. I'll catch you, dear listener, at the next episode.