Estimated reading time: 2 minutes
The International Finance Corporation (IFC) and the Bank of Industry (BoI) have partnered to strengthen trade and boost access to finance for micro, small and medium-sized enterprises (MSMEs) in Nigeria.
Olukayode Pitan, managing director of Bank of Industry said, “We are delighted to partner with the IFC on this laudable initiative towards ensuring that Nigerian businesses are not only able to boost their domestic production capabilities, but also able to partake actively in regional and global value chains for improved trade and economic growth.”
Nigerian MSMEs account for around 86 per cent of employment and contribute 50 per cent of nominal Gross Domestic Product (GDP), but receive less finance from the private sector than is the average in sub-Saharan Africa.
Two new IFC reports were launched at the supply chain finance workshop in Lago, providing fresh data and insights on the topic.
Based on a survey of about 1,000 MSMEs across Nigeria, IFC’s Market Bite Nigeria study identified an unmet demand for credit by Nigerian MSMEs of approximately ₦1.4 trillion, equivalent to $32.2 billion.
Some of the reasons attributed for this gap include regulatory constraints and gaps in financial infrastructure, as many financial institutions also perceive MSMEs as too costly and too risky to serve.
The report recommends that the financial industry use new technology and innovative business models to improve credit assessment capacity and better serve SMEs.
According to IFC’s new Supply Chain Finance Market Assessment Nigeria report, MSMEs generate more than half of the Nigerian supply chain finance opportunity, accounting for ₦1.4 trillion ($3.5 billion).
The report proposes that the supply chain finance market in Nigeria can be marketing supply chain finance to MSMEs, capacity-building among financial institutions, regulatory enhancements, and increased use of digital platforms.
IFC research shows that improving the availability and cost of trade and supply chain finance could boost trade volumes by 8 per cent to 16 per cent.
Kalim M. Shah, IFC’s senior country manager for Nigeria, Liberia and Sierra Leone, said “Strengthening supply chains and trade flows through additional finance could set the stage for faster growth, economic diversification and poverty reduction in Nigeria and the region.”
