By Busola Bamidele
Access to finance remains a major obstacle for small and medium-sized enterprises (SMEs) in Nigeria, limiting their ability to scale and sustain operations.
According to a 2023 report by the Nigerian Bureau of Statistics (NBS), 80% of small businesses in the country fail within five years due to poor financial management, inadequate market research, and insufficient government support.
Despite their struggles, SMEs play a crucial role in Nigeria's economy. A recent PricewaterhouseCoopers (PwC) report, citing NBS and SMEDAN data, reveals that SMEs contribute 46.32% to the nation's GDP, account for 96.9% of businesses, and provide 87.9% of employment. Yet, limited access to financing continues to stifle their growth.
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Anthony Chinwe, CEO of De-SME Facilitators Limited and former Group Head of SME Banking at Fidelity Bank, emphasizes that SMEs can improve their chances of securing loans by meeting five essential conditions, known as the 5 C's of Credit:
Capacity – The business must demonstrate a strong ability to repay the loan.
Cash Flow – A steady and sufficient cash flow is critical for covering loan repayments.
Character – Lenders assess the borrower's financial discipline and credibility.
Collateral – Some form of security may be required to reduce lending risks.
Capital – The SME must show commitment by having its own investment in the business.
Chinwe stresses that many SMEs struggle to access credit because they fail to meet these fundamental requirements.
He urges business owners to strengthen their financial records, maintain transparency, and build a solid repayment capacity to increase their chances of securing funding.
As Nigeria's SME sector continues to drive economic growth, experts insist that both financial institutions and the government must take active steps to support these businesses with accessible and affordable funding solutions.
