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Data Key to Improving Credit Access to SMEs in Nigeria

Data and collaboration are vital tools to improving credit access to small businesses across the country, experts said at a virtual media interaction on Government Enterprise and Empowerment Programme (GEEP).

Founder of Bankly, Tomi Adejana, a secure digital savings platform for the informal sector who joined other professionals working closely with the informal sector on ‘Securing the informal economy’ described the method used by most business owners in the informal sector as limiting, given the lack of credit history or data.

She said the importance data plays in helping to show a pattern for people in the informal sector who might want to use that historic insight as proof of their worthiness for more credit.

She explained why financial inclusion has remained a major topic in the country for more than a decade, as the practices available to this large productive sector of the economy almost certainly ensure that they can’t escape the cycle of poverty and start to create sustainable wealth.

While education is a core factor in financial exclusion, the lack of knowledge about credit facilities and how to access it prevents people within the informal sector from having that as an option; the lack of data remains a huge setback.

In 2016, the Federal Government GEEP started tackling this lack of data by supporting undocumented farmers and traders with micro-credit for their businesses. This move proved instrumental during the peak of the pandemic, as Executive Director, Micro Enterprises at the Bank of Industry (BoI), Toyin Adeniji, a co-panelist said COVID interventions should go using over 40 data points collected over the period the programme has run.

Founder of Rendra Foundation, Onyeka Akpadia, said there is a huge household dependency on the incomes of people, many of whom are women, running most of Nigeria’s informal businesses. This meant that every support they receive directly and indirectly affects the quality of life of families and wider communities. She stressed the need to work with more people who understand how the informal sector functions, to see that resources get to the right people and impact the right beneficiaries.

Managing Director of LAPO Microfinance Bank, Godwin Ehigiamusoe, said there are broader benefits that could be available to people within the informal sector if health and education interventions worked with grass root organisations to use their data in allocating micro-insurance to people in the informal sector to help them reduce heavy expenses made on those two line items. This, he said, would gradually move the process away from an intervention mode and make it institutional where all parties work seamlessly to create a pathway for everyone to benefit from such opportunities and escape poverty.

As it stands, different processes in Nigeria such as the current drive for citizen identification, private businesses in the financial space deploying agent networks to even the most remote areas to move people from unbanked to banked and help them save their money in more secure forms, as well as other financial illiteracy programs all point to a coming improvement in how the informal sector of the economy will be catered for.

Prof. Olawale Ajai of the Lagos Business School highlighted a shift in focus from people just looking for handouts to more sustainable financing for people eager to create real value.
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