Expert advocates structured merchant financing to boost SME growth

By Chinenye Anuforo

Director of Merchant Lending, FairMoney Microfinance Bank, Seun Oyediran, has stressed the need for improved access to structured merchant financing to support the growth of Nigeria’s small and medium-sized enterprises (SMEs).

Oyediran said SMEs remain the backbone of the Nigerian economy but continue to face significant challenges in accessing the capital required for expansion, inventory management and business sustainability.

According to him, despite accounting for about 96 per cent of businesses in the country, contributing nearly half of the nation’s Gross Domestic Product (GDP) and employing more than 80 per cent of the workforce, many SMEs remain underserved by traditional financial institutions.

He noted that limited access to financing has created what industry stakeholders often describe as the “missing middle,” where businesses with proven market demand struggle to scale because of inadequate funding.

Citing data from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Oyediran said SMEs play a critical role in economic development, but many are unable to take advantage of growth opportunities due to persistent credit constraints.

He identified merchant credit as one of the financing options that could help eligible businesses meet their working capital needs, replenish inventory, acquire equipment and support expansion plans.

According to him, merchant financing is designed to align with the operational realities of businesses by providing quicker access to funds for trade-related activities.

“For many merchants, the inability to maintain adequate stock levels translates to lost sales opportunities, reduced cash flow and diminished market competitiveness,” he stated.

Oyediran also highlighted the role of technology and data analytics in improving access to finance for SMEs.

He explained that advances in digital financial services are enabling lenders to assess creditworthiness using business performance data rather than relying solely on traditional collateral requirements, which have historically excluded many entrepreneurs from accessing credit.

The lending expert argued that a data-driven approach could broaden financial inclusion by allowing more viable businesses to qualify for financing based on operational performance and transaction history.

He further noted that improving access to merchant credit could have wider economic benefits, including increased business activity, job creation and support for Nigeria’s economic diversification agenda.

According to him, strengthening financing options for SMEs is essential to building competitive local enterprises capable of expanding beyond domestic markets.

Oyediran maintained that while ambition and entrepreneurial drive are abundant among Nigerian business owners, access to capital remains a major obstacle to growth.

He therefore called for greater deployment of flexible and data-driven financing solutions that can support business continuity and expansion while promoting sustainable economic development.