An editorial published today in BusinessDay argues that Nigeria’s deal rooms are busy, billions are being mobilised, and the macroeconomic signals are improving, yet the small and medium-sized enterprises that provide livelihoods for the majority of Nigerians remain structurally excluded from the capital that is circulating around them.
The piece, titled “Letting capital reach the businesses that create jobs,” frames Nigeria’s SME financing gap not as a funding problem but as a structural weakness that threatens the quality, inclusiveness, and sustainability of the country’s economic growth.
Read also: Nigeria’s fintech industry has technology gap nobody is talking about, SMEs are paying for it
The contradiction at the heart of Nigeria’s capital markets
Energy deals, infrastructure transactions, real estate investments, and financial sector arrangements are absorbing significant capital flows. The Dangote Refinery is preparing a $5 billion IPO. The NGX is delivering 69.5 per cent dollar returns year-to-date. Moody’s has upgraded Nigeria’s credit outlook. The macroeconomic story, by conventional metrics, is improving.
Yet the businesses that hire most of Nigeria’s workforce, distribute income most broadly, and drive the local production that reduces import dependence continue to be structurally locked out of the formal capital system. Fewer than one in 20 Nigerian SMEs has access to bank credit. Commercial lending rates above 30 per cent make formal borrowing financially irrational for most small business owners. The capital market remains effectively inaccessible to businesses that cannot produce audited accounts, credit ratings, and governance structures built for much larger organisations.
Deal rooms may be full, but if the capital circulating through them does not reach the businesses that create jobs, distribute income and drive local production, the wider economy will continue to struggle. That sentence should be pinned above the desk of every policymaker and capital allocator in Nigeria.
Read also: Access Bank to host maiden MSME Conference, launches SME app
What a different system would look like
The editorial identifies the collateral-first mentality of Nigerian lenders as a foundational barrier. The current framework asks “What collateral do you have?” before any other question, immediately disqualifying the majority of Nigerian small businesses whose value is in their operations, their customer relationships, and their cash flows rather than in fixed assets.
A more effective system would also ask: “What business do you operate? What cash flow does it generate? What can it become?” Digital financial records, tax compliance histories, payment transaction data, and verified contracts can provide alternative evidence of creditworthiness that is at least as informative as a land title, and is already available for the millions of Nigerian SMEs that are transacting digitally through fintech platforms.
The piece also identifies sector-specific funds calibrated to actual cash-flow realities as a structural improvement over generic lending facilities. Agriculture, manufacturing, healthcare, renewable energy, logistics, and technology each have distinct revenue cycles, risk profiles, and capital requirements. Funds designed around those specificities would deploy capital more efficiently and recover it more reliably than facilities that treat all borrowers identically.
The private sector has a responsibility here too. Investors who recognise that Nigeria’s growing businesses represent a pipeline of future large companies, not a social development project, will find that the commercial case for SME investment is stronger than the risk pricing in Nigeria’s current lending market suggests.
