Metilelu: Private Sector Must Evolve Alternative Financing for Education

Techpreneur/Chief Executive, PressPayNg, Mr. Abiola Metilelu, in this exclusive interview with James Emejo, says the private sector must develop alternative solutions to funding education in order to deepen human capital development in the country. Among other sundry issues around the economy, he expressed concerns over the country’s debt profile declaring that borrowing should fund productivity rather than mediocrity; the unfriendly business landscape for MSMEs as well as the positive impact of the company’s solutions in advancing credit to students in tertiary institutions.

How would you assess the current health of the Nigerian economy?

Despite the huge potentials of the Nigerian economy as the largest economy in Africa, our socio-economic conditions have deteriorated in recent times. If we narrow the parameters to the fundamental variables for measuring economic conditions, there is no question about the fact that Nigeria is not doing well – from unemployment to inflation, poverty, security, interest rate, debt, infrastructure, cost of living, exchange rate – the numbers are not looking good. It is my considered opinion that we can do better with the youth bulge advantage, the entrepreneurial spirit of the average Nigerian, the comparative advantage we have in agriculture and the rising tech innovations that are driving the digital economy. With effective political leadership – there is a strong potential for the economy to bounce back. The current administration has given its best shot at improving infrastructure; rail and roads,  tackling insecurity, terrorism, corruption and signing some strategic bills into law such as Not Too Young to Run Bill (2018), the launch of new National Digital Economy Policy and Strategy in 2019, drafting of the Nigeria Startup Bill (NSB) and submission of the draft Bill to the National Assembly for consideration and passage into law, the Petroleum Industry Act of 2021 that has set the stage for the unprecedented transformation of Nigeria’s oil and gas sector and making the new NNPC a Limited Liability Company.

But, beyond these highlights, there is a dire need to reset the economy for optimum performance and I think 2023 offers a huge opportunity, particularly by the incoming administration, to recalibrate the Nigerian economy towards productivity, improving the ease of doing business in order to foster economic prosperity.

As a techprenuer, how would you assess Nigeria’s business/investment landscape in terms of ease of doing business?

With a current ranking of 131 out of 190 economies in the world on ease of doing business, according to the recent World Bank annual ratings and a projection to trend around 135 in the global ranking by the end of 2023– you need no further conviction that doing business in Nigeria is not for the faint hearted. As the largest economy in Africa, this is one of the reasons why eighty percent of businesses under the Micro, Small and Medium Enterprises (MSME) in Africa fail within the first five years of their existence despite having the highest entrepreneurship rate in the world.

As entrepreneurs, we are not asking for too much – just provide an enabling environment, basic infrastructures, power, business friendly policies, security. About 61 per cent of Nigerian businesses fail at the startup stage because of the high cost of doing business, little or zero incentives for entrepreneurs, obsolete institutional designs and bureaucracies that are frustrating innovations. But personally, I draw inspiration from the fact that we cannot allow the system to neutralize our entrepreneurial spirit; its either we keep seeing the problems or we see the opportunities – sight is a choice. We have to be deliberate not to allow culture to eat strategy for breakfast – we cannot sustainably solve a problem at the thought level it was created, we shouldn’t give the environment the pleasure to condition our thinking.

In the midst of the harsh economic realities, Nigeria has become an attractive location for tech start-up investment inflows – making up twenty-eight per cent of Africa’s total funded ventures and the country receiving over twenty-nine percent of the continent’s total investments of $3.3 billion as at 2022. So, despite the daunting realities confronting entrepreneurs in the country, the economic potentials remain massive.

What is your impression about Nigeria’s public debt profile which has continued to generate fierce criticism in recent times?

When it comes to the conversations around our public debt profile, the question that comes to mind is – what are we funding with the borrowings? We should be funding productivity and not mediocrity but unfortunately the latter is our reality.  With a current N44.06 trillion total debt stock as at Q3 2022, spending N3.04 trillion to service external and domestic debts in nine months of 2022 – its deeply concerning that the debt stock is not reflecting in the economy and the debt burden will continue to soar. The finance minister was quoted as saying Nigeria will spend sixty percent of revenue on debt servicing in 2023. What this means is that other critical sectors of the economy will have to jostle for the remaining 40 per cent revenue. So, what are the revenue pipelines that we have left unexplored; particularly in the private sector? How can we begin to restore investors’ confidence in the economy and attract more FDIs?  With shrinking revenues and the government being the biggest spender in the economy – stimulating the economy for growth becomes the biggest challenge at hand. 

In your opinion, what are the country’s biggest limitations to economic development?

Our problems in this country are complex, and it could be difficult to single out the biggest limitations. But I believe that the limitations to economic development can be narrowed down to two things; leadership (across all levels of government) and education.

Political leadership will always define the socio-economic wellbeing of the people – it is the same principle that drives the corporates and we say no organization rises beyond the level of its leadership.

Unfortunately, we have not gotten this right across all levels of government in Nigeria. Our socio-economic realities leave traces of leadership failure and that is why citizens’ participation in governance is crucial not just during election but to demand accountability from our elected leaders. But I would like to amplify education as a catalyst for economic development. Not prioritizing our investment in education as a country has been a major disservice to our economic development. Education is the bedrock for technology, innovation and opportunity creation. If we spend more on education, we will spend less on insecurity as educated people make informed and better decisions. With over 20 million out of school children, and an annual dropout rate across higher institutions in Nigeria at over 18 per cent – One in every five of the world’s out-of-school children is in Nigeria, this is our sad reality.  We are underfunding education as a country – an increased allocation from 7.2 per cent of the 2022 budget to 8.8 per cent of the 2023 budget is still below the UNESCO benchmark of 15 per cent-20 per cent of public expenditure and that has created a domino effect in terms of unemployment, insecurity, immigration- brain-drain or the “Jappa syndrome” and we need to start changing these narratives.

What is your impression about the state of tertiary education in the country?

I think my response to the previous question dovetails into this. Tertiary education in Nigeria is characterized by many lapses and these challenges over the years have watered down the quality of education at the tertiary level. From incessant ASUU strike (the most recent which lasted for about eight months) to rising school fees confronted with parents’ low income, infrastructural gaps and poor welfare for academics – the government’s disbursement to education is definitely not commensurate to the demand for higher education. We must settle with the naked truth that government alone cannot fund education; the private sector must get involved with alternative funding solutions for institutions, parents and students in order to deepen human capital development in the country. This is the reason why we are involved in education financing – PressPayNg is the first indigenous platform in Nigeria that focuses on education finance at primary, secondary and tertiary levels – offering parents and students alternative and creative funding solutions to education in Nigeria.

The greatest form of poverty is intellectual poverty and the antidote to that is education. There is no doubt about the fact that the future of Africa will be birthed by entrepreneurs – but these entrepreneurs must be financially empowered to have the right education with the confidence that they can commence and complete tertiary education without having to drop out of school – This is what PressPayNg offers, the financial confidence that you can go to school and that journey will not be truncated for financial reasons.

What do you see as major obstacles to acquiring tertiary education in the country?

Funding. When we speak about funding education in Nigeria – we do justice to the issue by half; we focus more on the government side of funding education to make it accessible and qualitative. The other side of the divide is the affordability of school fees and the capacity of parents or working students to finance education; particularly at the tertiary level. What the government has done over the years is to subsidize the administrative and personnel cost of tertiary education in Nigeria through TETFUND rather than support the students who should benefit from the subsidy. There is no question about the need for government to continue to subsidize tertiary education but the subsidy needs to be repurposed. We have moved around; we have engaged students and parents – a lot of our youths are dropping out of school for financial reasons. Most parents are no longer able to pay school fees as poor salaries coupled with rising inflation have continued to take toll on their purchasing power. We have interreacted with parents who have resolved to “Ajo” or contributions to be able to pay school fees – there is a need for supplementary funding options. This is what we provide at PressPayNg; firstly, we are asking parents and students to periodically set something aside in their education savings account on PressPayNg and have it locked down only for school fees payment. In the events that they need additional funds to makeup the balance for school fees, they can have access to a collateral free, short-term school fees loan to enable them pay in full from PressPayNg.

What policy interventions do you recommend to fix the country’s education system?

We need to declare a state of emergency in the education sector in Nigeria and bring all stakeholders to a roundtable discussion with the appropriate political will to transform the sector.  As the foremost education finance technology in Nigeria – PressPayNg has been a vanguard of education loans and we are proud to say we championed the conversation on student loans through the national assembly – though we have our reservations on some of the elements of the proposed model by the national assembly in the Student Loan Bill. For instance, asking students to apply through the tertiary institutions will breed racketeering as those who genuinely need these loans will not get them. The PressPayNg model should be fully adopted by the federal and state governments across the country because of its transparency and filtration process.  We have gone further to canvass for education interventions that could possibly come as interest free loans from the likes of CBN or international development agencies directly accessible by students or parents using the PressPayNg App – we pay directly to schools and the tenor is short to drive the performance of the loans and provide these opportunities to millions of Nigerian students and parents. This is how we are gradually and progressively changing the landscape of education financing and affordability in the country in just about a year.

What is the rationale behind PressPayNg’ s tuition loans for tertiary education and what has been your success story. What do you want to achieve?

PressPayNg is an ecosystem and every youth, students and parents in Nigeria with education dreams and ambitions should have the PressPayNg App on their phones.  With the PressPayNg App – you can open an education bank account on the App with our partnering financial institution, you can save for school fees, crowdfund your school fees with your community of friends and families, enjoy scholarship, access up to 50 per cent of your school fees as a short-term loan, get holiday jobs, parents can subscribe to education insurance, students can subscribe to health maintenance (HMO), enjoy free soft skill trainings and benefit discounted bills payment. PressPayNg is beyond tuition loans – we are funding the future of Nigeria and by extension the future of Africa. We are driven by the passion to flatten the dropout curve across all the stratum of our education, increase the enrolment rates because of the solutions we have deployed in addressing education financing and affordability in Nigeria – PressPayNg will become the catalyst for human capital development in Africa.

Barely one year on, what has been your challenges and what are your projections especially for 2023?

I think the most interesting conversation about PressPayNg is the overwhelming acceptance and encomium around this novel idea and that energy has kept us firing on all cylinders. In just about a year, we have executed partnership and technical integrations with First City Monument Bank (FCMB), we have partnership with Cornerstone Insurance, Mutual Benefit Assurance, Sunu Health and Metro Health. In 2023, we want to further strengthen the position of our brand, to remain the leading education finance App in Africa – improving the innovation by listening to our subscribers, increasing user adoption across all the verticals with the best technology backed customer service. In 2022, we did over N10 million in scholarship disbursement, we want to do more this year.

Also, with the understanding that the market for unemployment is way bigger than the market for education, we are equally creating income opportunities for students and youths who sign-up as agents on the PressPayNg App and we hope to do more of that this year.  We are democratizing the space for partnership with other providers of fund to cater for the growing demand on education loans from parents and working students who are gradually cultivating a savings culture towards education funding – these are the plans we have for PressPayNg Wave 2. The greatest asset we have at PressPayNg is the team – teams are built on merit and everyone on this journey with us from the Board of Advisory to the Management Team and Operations Staff are deserving of the opportunities to contribute to this project.