The International Finance Corporation (IFC) and Bank of Industry (BoI) have teamed up to strengthen trade and boost access to finance for micro, small and medium-sized enterprises (MSMEs) in Nigeria.
Managing Director/CEO, Bank of Industry, Olukayode Pitan, who revealed this during a trade and supply chain finance workshop in Lagos, expressed the partnership is geared towards boosting the capability of Nigerian MSMEs to penetrate the regional and global market.
He 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.”
Two new IFC reports were launched at the event, providing fresh data and insights on the topic. Based on a survey of about 1,000 MSMEs across Nigeria, IFC’s Market Bite Nigeria: Innovation Offers Key to the Broader MSME Finance Market study identified an unmet demand for credit by Nigerian MSMEs of approximately N13 trillion, equivalent to $32.2 billion.
Nigerian MSMEs make up roughly 86 percent of the employment and 50 percent of the nominal Gross Domestic Product (GDP), although they receive a lot less private sector funding than is typical in sub-Saharan Africa.
Regulatory restrictions and infrastructure deficiencies are some of the causes cited for this gap, since many financial institutions view MSMEs as being too expensive and hazardous to serve.
The paper suggests that to enhance credit assessment capabilities and better serve smaller firms, the financial sector should make use of cutting-edge technologies and creative business models.
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 N1.4 trillion ($3.5 billion).
The report suggests that MSMEs should be made aware of the supply chain finance market in Nigeria. Financial institutions should also build their capacity, as should front office staff, regulatory improvements, and increased use of digital platforms.
According to IFC research, increasing the availability and affordability of trade and supply chain finance could increase trade volumes by 8% to 16%, promoting economic growth and diversification in Nigeria and other important regional markets.
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. We are glad to present these new reports with data and insights to encourage further investment to close the MSME finance gap,”
