Unquestionably, Nigeria has one of the biggest economies in Sub-Saharan Africa. Although it heavily depends on oil, its economy is supported by patches of corporate organizations that operate in practically every sector of the local economy, including international firms having offices here, local businesses, and primarily small and medium-sized businesses (SMEs). This discussion will concentrate on small and medium-sized enterprises (SMEs) and showcase what we have learned about them during these past few years.
What is considered an SME?
In Nigeria, SMEs are classified as businesses with less than 500 000 Naira annual revenue by the Nigerian Central Bank in its monetary policy in 1988. The National Policy for Micro Small and Medium-sized Businesses (MSMEs) has clearly differentiated businesses based on employees and assets for the purpose of clarity.
SMEs are businesses that are best identified by their capital, project size and cost, annual revenue, financial stability, and employee count, among other characteristics.
With all of that out of the way, SMEs seem like the best possible gateway to seizing financial opportunities in Nigeria. However, we observe that most of those business opportunities are left unseized due to poor financing access.
Poor access to Financing
As a result, many businesses have a hard time succeeding in their business journey. According to our research, over 70 percent of the respondents agree on the fact that having access to capital is the biggest financial challenge they have to face in the Nigerian market. And the next biggest challenge for SME owners was logistics issues which were agreed upon by only a mere 10% of the responders.
The difference between the ratio of the first and the second challenge certainly indicates how much of a problem poor access to financing actually is. On the other hand, 81% of Women business owners faced this financial challenge, contrary to 68% of Men.
Biggest financial challenges SME business owners
Even if the customers in Nigeria get their hands on the needed loan, the slow approval rate, cumbersome processes and high-interest rate makes the whole process much less fruitful on the customer’s part. Sometimes the slow approval of loans, need for collateral and complex processes can make businesses miss opportunities that otherwise would have paved their road to growth and success.
According to our survey, some of the biggest financial challenges in Nigeria right now are,
- Fast approval of loans
- Access to affordable interest rates for loans
- Cross bored forex transfer rates
- Bank transfer fees
The even more surprising fact is that 91% of the SMEs that got access to a fast business loan from Lidya have grown significantly after getting their needed capital.
Bank Transfer Fees
Even if you have cashflow and financing in Nigeria, the bank transfer fees can easily pile up to a significant amount. Transfer fees and especially micro-transaction fees, have been a big obstacle for SMEs. 70% of small business owners agree that ensuring low transfer fees will help their business finance immensely.
So Sign-up on to Lidya Finance-on-Demand today and start solving all your financial challenges with ease.
