Nigeria's small businesses must embrace transparency, proper bookkeeping, and disciplined financial habits to improve their chances of securing loans amid the country's toughest credit conditions in a decade, says Olusegun Sonowo, a Lagos-based senior banking executive.
Sonowo noted that banks "lend out depositors' money, not their own," making them cautious in a high-risk environment.
With interest rates at 27% and a 45% cash reserve ratio, lenders have become even more selective limiting access to credit for SMEs that account for 96% of businesses and nearly half of the nation's GDP.
Despite the squeeze, he highlighted alternative financing options such as private lenders, venture capital for high-growth ventures, cooperatives and savings groups for micro-enterprises, and infrastructure credit guarantees through institutions like InfraCredit.
He added that funding from family, friends, or personal savings can help businesses build a track record before approaching banks.
For a more supportive credit ecosystem, Sonowo urged the government to expand targeted, low-interest funds for agriculture, real estate, and manufacturing, and to deepen credit literacy.
He also encouraged entrepreneurs to cultivate strong savings habits to reduce overreliance on loans and strengthen long-term resilience.
