Small and medium-sized enterprises (SMEs) in Nigeria are facing growing challenges as limited access to financing continues to restrict business expansion, productivity and job creation.
Industry experts have warned that unless the funding gap affecting SMEs is addressed, the sector may struggle to reach its full potential despite its enormous contribution to the Nigerian economy.
According to data from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), SMEs make up about 96 percent of businesses in the country, contribute nearly half of Nigeria’s GDP and account for more than 80 percent of employment.
Despite their importance, many business owners still find it difficult to access the capital needed to grow their operations.
Speaking on the issue, Seun Oyediran, Director of Merchant Lending at FairMoney Microfinance Bank, said access to flexible financing remains one of the biggest obstacles facing Nigerian entrepreneurs.
“Limited access to financing remains one of the constraints affecting SME growth, effectively putting a limit on how much the country’s economy can grow.”
Oyediran explained that many businesses with strong growth potential are unable to expand because they lack the working capital required to fulfill orders, increase inventory and scale operations.
He noted that merchant credit is emerging as a practical solution, offering business owners faster and more flexible access to funds compared to traditional lending systems.
The financial expert also highlighted the growing role of digital financial services, which now allow lenders to assess businesses based on performance rather than relying solely on collateral.
According to him, this shift is helping many previously excluded entrepreneurs gain access to formal credit and financing opportunities.
Oyediran added that expanding access to flexible funding solutions could boost productivity, create jobs and strengthen Nigeria’s efforts to diversify its economy beyond oil.
He urged policymakers, financial institutions and stakeholders to work together in developing financing models that better serve the needs of small businesses.
Source: FairMoney Microfinance Bank / SMEDAN
