BOI advocates for Nigerian MSMEs to Embrace Digital Financial Innovation for Growth

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BOI advocate for Nigerian MSMEs

Financial experts have issued a compelling call to Micro, Small, and Medium Enterprises (MSMEs) in Nigeria, urging them to seize the opportunities arising from technological advancements. The focus is on adopting digital financial solutions to facilitate easier financing options, thus fostering business growth.

At the fourth Annual MSME and Startup Summit 2023 held in Lagos, Olukayode Pitan, the Managing Director/CEO of the Bank of Industry (BOI), emphasized the need for MSMEs to prioritize digitalization in the face of changing business dynamics. Pitan pointed out that many Nigerian MSMEs still operate with traditional, cash-based systems, highlighting the urgency for them to adapt and evolve with innovative trends.

The significance of MSMEs cannot be overstated, as they contribute between 40% to 55% of GDP and 50% to 80% of employment in most economies. Globally, there is a growing emphasis on leveraging financial innovations, particularly through financial technology companies (fintechs), to transform how MSMEs access finance, offering alternative funding sources.

Pitan emphasized that the traditional banking system alone cannot adequately serve the vast population of MSMEs, which necessitates the creation of fintechs and Payment Service Banks (PSBs) to provide diverse support services, ushering in a new era of financial accessibility.

Under the theme, “The Role of Alternative Financing and Digital Payment Adoption for MSMEs Sustainability and Competitiveness,” Pitan highlighted the multifaceted benefits of digitalization for businesses and the broader economy. These benefits include increased efficiency, market diversification, improved productivity, elimination of paperwork, and streamlined processes.

However, MSMEs face several challenges that impede their expansion and productivity, including difficulties in accessing finance, business environment challenges, infrastructure deficits, and a lack of business and technical knowledge. Pitan stressed that addressing these challenges is crucial to unlocking the potential of MSMEs.

To bridge the knowledge gap, Pitan pointed out various alternatives to financing for MSMEs. He cited mobile money services like Flutterwave, Opay, and Moneypoint, which have simplified money transfers and payments for goods and services via mobile phones and Point-Of-Sales (POS) terminals.

Digital banking has also disrupted traditional models, making it easier for MSMEs to access financing, exemplified by platforms like Cowrywise, a digital investment platform that facilitates saving and investing simultaneously.

Furthermore, Pitan highlighted government policies that encourage digital adoption, including the National Digital Economy Policy and Strategy, the National Broadband Plan 2020-2025, and the Nigerian Startup Act, all aimed at fostering digital innovation and supporting MSMEs.

In conclusion, Pitan recommended establishing a conducive regulatory environment, improving credit information infrastructure, and encouraging financial institutions to leverage digital technologies to support MSMEs in their quest for growth.

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