Micro, Small and Medium Enterprises (MSMEs) are crucial to the development of a country’s economy, especially countries in emerging economies like China, Brazil, Thailand, India, Nigeria, South Africa, Indonesia etc.
According to a report from the Small and Medium Enterprises Development of Nigeria (SMEDAN), the MSMEs represent 96 per cent of the businesses in Nigeria and contribute about 86 per cent of the national employed labour force.
The 41.5 million MSMEs in Nigeria contribute about 48 per cent of the Nigerian GDP estimated at $397 billion. Despite this significant contribution to the economy, access to finance and credit remain a significant challenge for this sector.
Also, the technology space in Nigeria have continued to grow despite the harsh operating environment. Based on findings such as Disrupt Africa’s AfricanTech Start-ups Funding report 2018, Nigeria finally overtook South Africa as the market of choice for start-ups with 58 start-ups raising $94.9 billion for investment.
Another major indicator of the growing Nigerian tech ecosystem is the rise of tech hubs, growing from 23 in 2016 to 55 in 2018 and, according to a 2016 report from the World Bank, tech hubs in Africa are enabling the growth of digital technologies which help to drive economic growth through innovation, efficiency and inclusion.
Most of these tech start-ups, however, face certain challenges ranging from localisation, education and, of course, funding.
The governments and banks are aware of credit drought in the sector with the former taking several steps through the ease of doing business initiatives to make access to finance more inclusive – the credit bureau, the National Collateral Registry (NCR), the business registration platform and the intervention funds.
These initiatives have made it easy for banks to lend to MSMEs segment and Access Bank being at the forefront, leveraging on these infrastructures, has significantly invested in the understanding of the sector, engendering an expanded lending methodology which cumulated in a growth rate of 30 per cent over a three-year period.
Speaking during a recent media session in Lagos, its Head of Emerging Businesses, , Ayodele Olojede, revealed that the bank in 2018, granted about N37 billion as new loans to 12,000 SME customers and about N22 billion was given to 8,000 customers in 2017.
Olojede attributed the loan decline to the inability of MSMEs to provide traditional collaterals as well as structured business plans and proper financial statements.
“At Access Bank, all we require to finance MSMEs essentially is a good credit report and proper keeping of sales records. We work with the asset type that you have and register it on the NCR.
“We are expanding our footprint in the service industry- specifically; Health, Education, Technology and Fashion. In 2019, the Nigerian Healthcare Excellence Award (NHEA) awarded the Bank with the “Outstanding Healthcare SME Friendly Financial Institution of the year” in recognition of its financial support to the Health sector in Nigeria. Pharmacies, Hospitals, Medical Laboratories and Diagnostic centers can access up to N3 million collateral free. This has been enabled by our partnership with Medical Credit Fund and JNCI. Over N2 billion has been granted to about 600 Health practitioners. For school owners -we support them with upgrade facilities, laboratory equipment, books, school uniforms and staff salaries. Over N500 million was granted to about 300 schools
Further more, Olojede said:
“We have also been at the forefront of the recently introduced creative sector intervention loan for movie, IT, music and fashion industry granting long term loans at a single digit interest rate”
With this, we are helping them with their finances, business management practices, helping them with understanding alternative methods of how to be able to sell their businesses and also supporting them with loans
We have also been at the forefront of the recently introduced Creative sector intervention loan for Movie, IT, music and fashion industry granting long term loans at a single digit interest rate” Olojede noted.
The bank noted that in addition to providing access to finance for businesses, they have invested in the provision of the “ecosystem of solutions to support our customers because we know that it is the advantage your business needs to have an edge over others.”
Access Bank have progressed from impacting 4,000 “customers with his various capacity building and access to market initiative a year to 12,000 customers in 2018 and the plan for 2019 is 30,000 customers.
According to the bank, “We hold MSME clinics where business owners have one on one engagements on their business issues with consultants. We support businesses with affordable e-commerce platform, technology offering for efficiency- from our mobile app. And now we are also supporting the sector with visibility/access to market offerings on TV within Nigeria and indeed Africa in partnership with Ebony Life TV which will be featured on Startimes and DSTV”.