A financial services expert has emphasized the need for improved access to structured merchant financing to unlock the growth potential of Nigeria’s small and medium-sized enterprises (SMEs), describing the sector as a critical driver of economic development.
Seun Oyediran, Director of FairMoney Merchant Lending, stated that while SMEs account for the overwhelming majority of businesses in Nigeria and contribute significantly to employment and national output, access to financing remains one of the biggest barriers limiting their growth.
According to Oyediran, SMEs make up about 96 percent of businesses in Nigeria, contribute nearly 50 percent of the country’s Gross Domestic Product (GDP), and employ more than 80 percent of the workforce. Despite their importance, many businesses continue to struggle with limited access to credit needed for expansion, inventory management, and operational growth.
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He noted that the financing gap facing SMEs has created what is often referred to as the “missing middle” in the economy, where businesses with proven demand and growth potential are unable to scale due to inadequate funding.
“Many businesses are unable to fulfill orders, optimize inventory, or expand their operations simply because they cannot access the capital required to support growth,” he said.
Oyediran explained that merchant credit has emerged as a viable financing solution for businesses seeking working capital and inventory support. Unlike traditional commercial loans, he said merchant credit is designed to address the immediate needs of businesses by providing funding for inventory replenishment, expansion initiatives, and equipment acquisition.
According to him, access to such financing can help businesses maintain stock levels, improve cash flow, and strengthen their market position.
He further highlighted the role of technology and digital financial services in transforming SME lending, noting that lenders are increasingly relying on business performance data rather than traditional collateral requirements to assess creditworthiness.
“The evolution of digital financial services has changed how we evaluate businesses. Rather than focusing solely on physical assets or formal credit histories, lenders can now assess operational performance and transaction data to make informed lending decisions,” he said.
Oyediran argued that expanding access to structured financing for SMEs could have broader economic benefits, including increased business activity, job creation, and private sector growth.
He stressed that supporting SMEs is particularly important as Nigeria seeks to diversify its economy and reduce dependence on oil revenues.
According to him, building globally competitive businesses and export-oriented enterprises will require greater integration of SMEs into modern financial and credit ecosystems.
“The gap between a local business and a regional industry leader is often not ambition but access to capital. To develop the next generation of African business champions, there must be greater focus on flexible and data-driven financing solutions,” he said.
He added that when responsibly structured and effectively deployed, merchant credit can support inventory management, business continuity, and sustainable growth for eligible enterprises.
The expert called for increased collaboration among financial institutions, fintech companies, policymakers, and development stakeholders to bridge the financing gap and strengthen the role of SMEs in Nigeria’s economic transformation.
