HOW TO SOLVE THE CREDIT CHALLENGE FACED BY NIGERIAN SMEs

The Significance of SMEs cannot be downplayed when it comes to any economy because they play a vital role in economic and national development. According to a PricewaterhouseCoopers (PwC) report In Nigeria, SMEs account for 48 per cent of the national GDP, 96 per cent of businesses, and 84 per cent of employment in the country. In contrast to this, the rate at which they fail is unsettling.

Why then are SMEs failing? Presently, the challenges faced by SMEs can be categorised into two major areas, there are systemic challenges with issues around lack of infrastructure, rise in prices which is driven by foreign exchange, inflation, and devaluation not to mention the growing energy prices. While a closer look into the value chain for SMEs, some predominant challenges are receipt of payment, information asymmetry, and then there is access to credit, which causes an impediment in the inflow of cash for them.

Speaking about access to credit, one of the numerous digital financial solution providers that are fostering access to credit and enabling SMEs to thrive more in business is Vendorcredit. In a recent sit-down conversation with Arise Xchange, Oluseye Seton, Co-founder and Chief growth officer of Vendorcredit reiterated the support that SMEs are getting from the fintech company in terms of access to credit. He stated, ‘’We have no other alternative than to support and trust the SMEs as 9 out of 10 accounts for the 7 out of the 10 employed in the country. It’s a critical segment that can’t be overlooked as accessing credit is quite important to them.’’

What Vendorcredit has done over the years is bridge the credit gap with a key focus on income generation/ production lending- the ability to give out funds to SMEs enabling them to generate additional income to carry out business expenditures and thrive. They have successfully provided SMEs with loans for their working capital. Asides from this, Vendorcredit has solved the prevailing challenges faced by SMEs with their offerings and services by granting access to loans to complete a customer’s order, stock up on fast-moving inventory, and unpaid customer invoices, pay employees and suppliers and carry out other key business needs.

In conclusion, accessing credit is solely dependent on available data to check the financial credibility of SMEs. Oluseye Seton emphasised this by saying, ‘’We need to look at innovative ways to use available data- traditionally, financial data and alternative data to ascertain if the SMEs are creditworthy in order to build a credit score that would give predictive analysis on how they would perform when credited.’’