Enhancing SMEs’ capacity for inclusive development

Small and medium enterprises (SMEs) are globally acknowledged as catalysts for inclusive economic growth and development. They are crucial levers for mainstreaming economic development programmes, especially in developing economies. In Nigeria, SMEs are the largest employers, accounting for more than three-quarter of jobs. SMEs contribute half of the country’s Gross Domestic Products (GDP) and are the backbones of the nation’s real sector.

A report by PricewaterhouseCoopers (PwC) estimated that wholesale and retail trade and manufacturing sectors dominated the SMEs space in Nigeria, constituting 25.3 per cent and 22.5 per cent respectively. This underscored the importance of SMEs as the linchpin for national industrialisation.  SMEs are typically labour-intensive and as such serve as the most practical channels to create more jobs, widen prosperity and reduce insecurity, three key challenges confronting Nigeria.Several reports have highlighted that the two main challenges facing SMEs in Nigeria are access to finance and managerial capability. A collaborative survey by National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) identified six key constraints confronting SMEs sector. These include access to finance, weak infrastructure, policy inconsistency, lack of work place, multiple taxation and obsolete technology.

Renewed public, private efforts

Governments and private stakeholders have shown renewed efforts in holistic approach to SMEs development. From general ease of doing business, exemptions, tax incentives, national procurement fiscal policy to trainings, machineries, tool kits, mentoring, hubs and mass enlightenment campaigns; to direct finance access, credit guarantee, grants and special funding interventions in the form of single-digit soft loans and uncollaterised funding, SMEs are at the frontier of expansive framework to drive inclusive development.With a N100 billion initial capital, National Credit Guarantee Company (NCGC) recently rolled out programmes to widen credit access to micro, small and medium enterprises (MSMEs). NCGC, established under the multi-faceted financing and consumer credit policy framework of President Bola Tinubu’s administration, aims at providing much-needed safety net for easy access to finance for MSMEs, local manufacturers and credit consumers.

NCGC is one of the ways the government is stimulating private finance to catalyse national economic growth. NCGC mainly plays the crucial role of a guarantor of loans, thereby reducing the risks for lenders and encouraging increased credit availability. Such de-risking reduces exposure and increases number of participating financial institutions (PFIs), lowers default rates, promotes financial inclusion and ultimately drives economic growth.

Managing Director, National Credit Guarantee Company (NCGC), Bonaventure Okhaino, underscored the importance of public, private partnerships in its mission to opening up access to credit.

“Our success hinges on inclusive partnerships and collaboration with all stakeholders in the financial ecosystem. We firmly believe that by working together, we can build a more inclusive, resilient and dynamic credit market in Nigeria. We will partner with PFIs, leverage data and technology, engage industry groups, build capacity, raise public awareness and advocate for enabling credit policies,” Okhaino said.

He succinctly captured the intersection between NCGC and the Nigerian Consumer Credit Corporation (CREDICORP), another agency established by the current government.

CREDICORP, which has enabled more than 90,000 beneficiaries in structured consumer credit since April 2024, is implementing a multi-pronged strategy to support consumer purchase, a major lifeline for SMEs. From its initial takeoff capital of N100 billion, CREDICORP, through public-private partnerships, plans to mobilise some N176 trillion to close the country’s consumer credit shortfall, currently estimated at N141.3 trillion.

Under the strategy, CREDICORP targets consumer credits for 50 per cent of all working Nigerians by 2030, with consumer credits expected to reach 50 per cent of the Gross Domestic Product (GDP). It is also managing Federal Government’s special interventions for youth development, such as the YouthCred. The YouthCred programme is a loan-providing national credit campaign to change how young Nigerians think about money, borrowing, trust, and financial responsibility.

The scheme started with youths under the National Youth Service Corp (NYSC) but plans to expand to all employed young Nigerians between the ages of 18 and 39, as well as youth-led businesses across the country. The broader rollout is expected to deepen access to both personal and business credit, especially among underserved populations.

Key features of the YouthCred programme include gamified, fun-filled financial education before access to loans, no collateral or guarantor required to access loans; full digital onboarding using Bank Verification Number (BVN) and National Identification Number (NIN) and fast approval and disbursement.

YouthCred provides access to structured, low-interest credit for needs such as relocation, digital devices, mobility, or small business support. It was another government’s effort to stimulate the consumer market and MSMEs. By equipping young Nigerians with the tools to responsibly access and manage credit, the initiative aims to support job creation, entrepreneurship, mobility, and digital inclusion.