Funding MSMEs in Nigeria

The small and medium enterprise (SME) sector is widely regarded as the backbone of many economies, including Nigeria. The Director General of the Small and Medium Enterprises Development Agency of Nigeria, Charles Odii, emphasizes the crucial role of market information on available government funds and the significance of partnerships in helping MSMEs scale their operations. In a recent interview with CNBC Africa, Odii shed light on the current state of the MSME space in Nigeria, highlighting the challenges faced by small businesses and the initiatives underway to address them. According to Odii, Nigeria is home to nearly 39 million small businesses that contribute to 50% of the country's GDP and employ approximately 60 million people. However, the sector witnessed a decline from 41 million to 39 million between 2017 and 2021, largely attributed to the impact of COVID-19, insecurity, and government regulations. To counter this decline, efforts are being made to streamline the registration process for SMEs and enhance security measures to safeguard businesses. One of the key hurdles facing MSMEs in Nigeria is the lack of awareness regarding funding opportunities, both from the government and the private sector. Odii acknowledges the significant barrier posed by the limited dissemination of information to small businesses and highlights the need for a collaborative effort to address this issue. By leveraging partnerships with various stakeholders and media platforms, such as CNBC Africa, efforts are being made to ensure that MSMEs across the country have access to vital funding information. Odii also discussed a recent development in securing a 5 billion Naira loan portfolio in partnership with Sterling Bank, aimed at supporting 10,000 SMEs at a single-digit interest rate. This initiative is seen as a crucial step towards democratizing access to capital for small businesses, considering that only 4% of Nigeria's 39 million small businesses currently have access to credit. The availability of affordable financing is expected to stimulate job creation, business expansion, and overall economic growth. In the context of global trade and value addition, Odii emphasized the role of sub-nationals in facilitating partnerships and funding opportunities for MSMEs. Access to finance, information, and markets are identified as key pillars for Nigerian subcontractors to participate effectively in initiatives like the African Continental Free Trade Area. By prioritizing access and inclusivity, small businesses can unlock their full potential and contribute significantly to economic development. As Nigeria aims to strengthen its MSME sector, collaboration, information dissemination, and access to finance emerge as critical enablers for small businesses to thrive. With concerted efforts from government entities, financial institutions, and media platforms, the path to empowering MSMEs in Nigeria becomes clearer, paving the way for sustainable growth and economic resilience.