Taiwo Joda: Nigeria’s MSME Economy at Risk Unless Lenders Become Enablers

Sunday Ehigiator

The Managing Director of Accion Microfinance Bank, Mr. Taiwo Joda, has warned that Nigeria’s Micro, Small and Medium Scale Enterprise (MSME) sector risks stagnation unless financial institutions urgently evolve from traditional lenders into full-scale enablers of business growth,

Joda sounded the warning during Accion Microfinance Bank’s 2025 Annual Financial Inclusion Seminar, held recently with the theme ‘Unlocking MSME Value Chain to Drive Growth and Prosperity: The Evolving Role of Financial Institutions’.

The event brought together financial sector leaders, regulators and private-sector players at a time when inflationary pressures, weakened consumer demand and rising business mortality are squeezing small businesses across the country.

According to Joda, Nigeria can no longer afford a financial system that discourages entrepreneurs before they even begin operations.

He said, “complex documentation, rigid collateral requirements and slow onboarding processes are shutting millions of MSMEs out of formal finance, despite the sector contributing about 48 per cent of GDP and 84 per cent of national employment.

“Financial institutions must work with regulators to co-design rules that control risk without scaring MSMEs away with paperwork. Simpler documentation, clearer guidelines and digital-first onboarding systems are immediate wins.”

He stressed that unlocking MSME value chains requires deliberate regulatory and institutional reforms, identifying four urgent steps government and regulators must take.

“These include simplifying Know-Your-Customer (KYC) requirements for low-risk MSMEs, relaxing collateral rules in favour of cash-flow–based lending, accelerating approvals for digital lending platforms, and enforcing faster, more transparent processes at the Corporate Affairs Commission (CAC) and land registries.

“These changes would immediately open up credit channels across the entire MSME value chain,” he noted.

Joda also argued that microfinance banks must move beyond the narrow role of credit providers to become ecosystem architects that actively integrate MSMEs into productive value chains.

He explained that institutions like Accion can leverage their existing MSME networks to connect producers, distributors and service providers on shared digital platforms that combine payments, training, market access and partnerships alongside credit.

“By becoming the hub that links finance with supply chains, information and technology, financial institutions position themselves as enablers of MSME growth rather than just sources of loans,” he said.

On alternative financing, Joda highlighted the need to reduce dependence on traditional collateral by adopting data-driven lending models.

He said “approaches such as cash-flow lending, inventory-backed financing and revenue-sharing advances can unlock capital for businesses that lack property or fixed assets, by using sales records, POS data, mobile money history and supplier transactions as indicators of creditworthiness.

“Stronger partnerships between banks, fintech companies, regulators and private-sector players are critical to strengthening MSME value chains and boosting national productivity.

“While banks provide stable funding, fintechs offer real-time data and seamless onboarding, regulators ensure clearer rules, and private companies create access to markets and distribution networks.

“When these pieces come together, MSMEs gain easier access to finance, stronger supply-chain linkages and more predictable demand, which ultimately lifts productivity across the economy.”

He also acknowledged that many Nigerian MSMEs struggle with basic financial management, digital tools and business planning, gaps that limit growth and access to formal finance.

To address this, he said institutions like Accion must embed financial literacy and digital skills training into their lending processes through simple, practical and technology-enabled capacity-building programmes.

Joda concluded by urging policymakers to simplify registration and reporting requirements, enable data-driven lending frameworks and incentivise long-term, sector-specific support for MSMEs, warning that without coordinated action, Nigeria risks undermining the very businesses that power its economy.