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SMEs: Enhancing Access to Funding in a Pandemic

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understanding SMEs risk timi olubiyi

By Timi Olubiyi, Ph.D

Globally, Small and Medium Enterprises (SMEs) are critical to the development of any economy as they possess great potentials for reducing poverty through employment creation and income generation.

This sector also improves innovation, local technology, output diversification, development of indigenous entrepreneurship and forward integration with large-scale industries.

Further to this, in Nigeria, many people work for these SMEs for subsistence. Therefore, the importance of SMEs is well recognized and documented in Nigeria. Regardless of the significant contribution to the economy, SMEs’ survival rate is significantly lower than that of large corporations.

Unfortunately, SMEs in Nigeria have underperformed over the years. However, these SMEs in Nigeria constitute more than 90% of the businesses around, their contribution to the nation’s GDP is below 10% according to recent data.

Empirical evidence shows that finance contributes about 25% to the success of SMEs, and one of the key issues attributed to non-performance is lack of access to funds. Having access to fund gives SMEs the chance to develop their businesses and acquire better technologies for production, therefore, ensuring competitiveness.

However, funding has remained one of the key SME internal issues that confront most enterprises in Nigeria today. SMEs in Nigeria face this gap, and this restricts their economic prosperity.

Consequently, the lack of external funding available for small and medium enterprises (SMEs) is the focus of this article.

Recall, Small and Medium Development Agency of Nigeria (SMEDAN) is the Nigerian government’s institution to develop the SME sector. The agency provides insight into the definition of small businesses based on the number of employees.

The agency defined small and medium enterprises (SME) as a business employing 1 to 200 persons. Therefore, in the context of this article, this definition is relied upon.

Further to this, the SME sector in Nigeria is bedevilled with many challenges. Among these, shortage of finance occupies a very central position, even though the economic and funding importance of the small and medium enterprise (SME) sector is well recognized in academic and policy literature and also evident globally.

Access to funds and financing for these SMEs remains severely constrained, thereby restricting their business growth. For several reasons, large firms may have a comparative advantage over SMEs because of their business structure, credibility in the market and easy access to funding. The limited access to funding by SMEs usually impedes on their productivity and growth.

Evidently, SMEs face credit discrimination from banks because of the opacity of their business information, lack of structure and it is also quite common that these SMEs do not have in place necessary audited financial statements.

For these reasons and more, it is usually difficult for SMEs to show credit quality to banks and other financial institutions. So, SMEs are seen to constantly experience financial constraints, and they experience more stringent credit terms than the large companies, which are seen to be less risky in Nigeria.

Access to finance can give SMEs the chance to develop their businesses seamlessly and acquire better technologies for production, thereby ensuring their competitiveness. However, funding has remained one of the key SME internal issues that keep confronting most enterprises in Nigeria today.

To substantiate this perennial issue, an opinion poll was conducted SMEs in Lagos State- (computer village Ikeja, Alaba international market and some market associations (Auto Spare Parts and Machinery Dealers-ASPAMDA and Balogun Business Association) the findings also revealed one of the main constraints faced by SMEs to be lack of access to finance.

Typically, most of the respondents cited funding and access to finance is the most important constraint. About 79% of small firms cited a lack of finance and access to financing as the main constraint to their business growth. That means only 21% of them have access to required funding for the development of their businesses, and this crucial enabling factor is difficult for SMEs to access.

Consequently, the access to the necessary financing or credit required to expand and continues to perform the business operation, growth, innovation and employment will be affected greatly.

Banks and credit institutions perceive SMEs in Nigeria as risky structures: not very resilient, fragile in terms of activity, solvency and management. Context observation also revealed that many banks do not have specialized products targeted at SMEs, particularly startups and micro-businesses in Nigeria. The absence is due to the banks’ reluctance to lend funds to start-up firms, as it is found that these younger firms’ survival rates are lower than the established large firms.

The opinion poll conducted also indicated that constraints are larger for SMEs in relation to larger firms due to inadequate assets for use as security or collateral. From the opinion poll, it was further gathered that a very high-interest rate is one of the most significant barriers for small businesses to access funding in Nigeria.

SMEs are discouraged from taking loans from banks, as they cannot agree with the loans’ price. Because it will only increase their debt burden, and that can negatively affect the value of the businesses. Other factors discovered that affect the access to finance for SMEs are cumbersome application procedures, short loan maturities, collateral requirements and the novel coronavirus (COVID19), which has drastically changed the lender characteristics, among others.

The COVID-19 has had devastating economic effects on the world, and countries are experiencing a decline in economic output. Majorly, SMEs have been hard hit in Nigeria with their business continuity severely threatened.

The economic impact of the COVID-19 pandemic is very high, and perhaps the government might need to consider more pragmatic palliatives such as social and fiscal policy palliatives targeted at these SMEs for sustainability.

These include providing more low-interest credit facilities and tax breaks- particularly cutting taxes to increase disposable income. Most SMEs run their businesses on loan facilities, and the current situation has impeded their capacity to access or service current loans.

Nigeria’s government needs to continually support this significant sector, given its potential growth and poverty reduction opportunities. Consequently, interventions and policy responses to promote access to finance for these SMEs are recommended. The key recently released guidelines and requirements to access the Central Bank of Nigeria (CBN) announced COVID-19 palliative measures worth N3.5 trillion for businesses, should be relaxed to promote wider eligible participation of SMEs.

Those that truly and meaningfully require it might not be able to access it, especially the micro-businesses and Small firms if the current requirement is not reviewed. Besides, government and regulators may take initiatives to reduce the interest rate for SMEs, which can foster the growth of the SMEs and contribute to the economy and (net) employment creation.

From the aforementioned, it is also apparent that SME operators need to pay adequate attention to the structure of their businesses, adopt good corporate governance, prepare a financial statement when due and keep proper records.

The symmetry of information in the companies will strengthen the capacity to access finance for growth. Where necessary, the engagement of knowledgeable professionals can also make a substantial impact on your business operations and give advice on innovative SME financing.

For instance, the capital market can present opportunities and give alternatives to bank lending. Therefore, to achieve the right type of funding for your business, it might be necessary to seek advice or professional guidance. Good luck!

How may you obtain advice or further information on the article?

Dr Timi Olubiyi is an Entrepreneurship and Small Business Management expert. He is a prolific investment coach, Chartered Member of the Chartered Institute for Securities & Investment (CISI), and a financial literacy specialist. He can be reached on the twitter handle @drtimiolubiyi and via email: dr***********@***il.com, for any questions, reactions, and comments.

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Building 234 Solutions: A Response to Everyday Workforce Challenges

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Owoloye Emmanuel 234 Solutions

By Owoloye Emmanuel

Every business starts with a problem. For us, that problem was hiding in plain sight.

Across organisations, we kept seeing HR professionals, payroll teams, and business leaders spend significant time navigating processes that should be simpler. Employee records sat across multiple systems, payroll processes required manual intervention, and routine workforce tasks often became more complicated than they needed to be.

As businesses grow, workforce operations naturally become more complex. Yet many organisations still rely on disconnected tools and workflows that create unnecessary friction for both employers and employees.

The consequence is more than operational inefficiency. HR teams spend valuable time managing systems instead of supporting people. Business leaders struggle to access timely workforce insights, while employees experience delays in processes that should be seamless.

These weren’t isolated challenges. They were recurring realities across workplaces, regardless of industry or size.

That observation led us to a simple question: what if workforce management could be easier?

What if HR, payroll, and workforce operations could work together within a single, connected experience?

That question became the foundation for 234 Solutions.

We are building 234 Solutions with a clear belief that workplace technology should reduce complexity, not add to it. Our goal is to help organisations spend less time navigating processes and more time focusing on productivity, growth, and people.

As we prepare for launch, our focus remains simple: building practical solutions for real workplace challenges and helping organisations create better experiences for the people who power them every day.

Owoloye Emmanuel is the founder of 234 Solutions

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The Role of TV in Preserving African Stories and Identity

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Preserving African Stories

Scroll through social media today, and you will notice something interesting: everyone is either reacting to a series, quoting a movie line, or debating a character as though they personally know them. Beneath the memes and binge-watch culture, however, lies something deeper. Television remains one of the most powerful tools shaping how Africans see themselves, remember their history, and tell their own stories. In a continent as diverse and expressive as Africa, that matters more than ever.

TV as a Cultural Archive, Not Just Entertainment

Long before streaming algorithms began shaping our viewing habits, television was already preserving African identity. From Nollywood dramas that capture the rhythm of everyday Lagos life to documentaries exploring Maasai traditions and Ghanaian folklore, TV has served as a living archive of the continent’s stories.

It preserves more than entertainment; it preserves language, culture, humour, values, and shared experiences. Unlike fleeting social media content, television allows stories to unfold with depth, exploring the realities of family, tradition, ambition, and modern African life without reducing them to stereotypes. That is the power of TV: preserving not just stories, but perspective.

Why Representation on TV Still Matters

There is a subtle but important truth: if people do not see themselves on screen, they may begin to believe their stories are not worth telling. This is why African TV content is more than entertainment; it is affirmation.

Seeing a character who speaks like you, struggles like you, or celebrates like your community does something powerful. It validates identity and challenges outdated narratives that have historically defined Africa through external lenses.

This is where MultiChoice Group, through platforms such as DStv and GOtv, plays an important role. They do not simply broadcast content; they help distribute cultural memory at scale.

GOtv, DStv, and the Everyday African Viewer

Think about a typical evening in many African homes: the TV is on in the background, someone is laughing at a comedy show, another person is watching a local series, and someone else is catching up on the news. That shared viewing experience remains very real.

Through platforms such as DStv and GOtv, African households are exposed to a blend of local storytelling and global content. More importantly, they have helped amplify African-produced content by bringing Nollywood films, African reality shows, talk shows, and documentaries into mainstream rotation.

It is not just about access. It is about visibility.

A young filmmaker in Lagos today is more likely to believe their story matters because they have seen similar stories broadcast widely. A child in Accra grows up hearing familiar accents and seeing environments that look like their own on screen, not as exceptions, but as the norm.

TV Is Also Shaping Modern African Identity

African identity is not static; it is evolving. Television reflects that evolution in real time.

Today, audiences see:

  • Young Africans balancing tradition and modern dating culture

  • Stories tackling mental health in African households

  • Fashion and music influences spreading through TV series

  • Political satire shaping public conversation

Conversations that were once confined to homes are now being explored on screen, giving audiences the language to discuss issues that were previously unspoken.

In many ways, television is doing what oral tradition has always done: passing stories, values, humour, warnings, and history from one generation to the next. The difference is that today’s griots are writers, directors, and broadcasters.

The Future: From Watching to Owning Our Narratives

The next stage of African storytelling is not just about being seen; it is about ownership.

As more African creators produce content and platforms continue to invest in regional storytelling, television becomes more than a mirror. It becomes a tool for shaping how Africa is represented to itself and to the world.

While streaming continues to grow, television, particularly accessible platforms such as GOtv, remains one of the most effective ways to reach everyday audiences across different income levels and regions. After all, storytelling only matters if people can access it.

African stories are not new. They have always existed in families, on streets, in markets, in history books, and through oral traditions. What television has done, and continues to do, is give those stories a stage wide enough for millions to experience them at once.

The next time you watch a local series or documentary on DStv or GOtv, remember that you are not just being entertained. You are participating in the preservation of African identity itself.

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The Future of AI in Nigerian SMEs: Overcoming Barriers to Implementation

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Kehinde Ogundare 2025

By Kehinde Ogundare

Ask a tech entrepreneur in San Francisco what AI means for their business, and they are likely to talk about competitive advantage, product differentiation, and scale. Ask a small business owner in Kano or Onitsha the same question, and the conversation shifts entirely.

For many Nigerian SMEs, the priority is keeping the lights on, managing costs, and finding sustainable ways to grow in a challenging economic environment. This difference in perspective explains why the global AI conversation, often shaped by assumptions about stable infrastructure, deep capital, and abundant technical talent, frequently fails to address the realities facing Nigerian SMEs.

This matters because Nigerian SMEs are not a peripheral concern. In 2024 alone, MSMEs contributed 46.32% to Nigeria’s GDP, accounting for 96.9% of businesses and 87.9% of employment. These businesses are the backbone of the Nigerian economy, and if AI is going to mean anything for Nigeria’s development, it has to work for them in the daily conditions they actually operate in.

However, research drawing on empirical data from 144 Nigerian SMEs found that inadequate infrastructure, low digital literacy, skills shortages, and regulatory gaps are collectively preventing them from meaningfully engaging with AI. Awareness of AI is high and growing. What is missing is a clear and honest conversation about what adoption actually requires in this specific context. The barriers are real, but none of them are insurmountable. The question is whether the tools, pricing models, and support structures being offered to Nigerian SMEs are designed with those barriers in mind, or whether they have been built for another market entirely.

Subscription models making AI affordable for small businesses

When most small business owners hear “AI,” they imagine expensive software, specialist consultants, and a hefty upfront bill.

That assumption is not entirely wrong, but it describes a particular way of buying technology, not AI itself. The shift that makes AI genuinely accessible at the SME level is the move away from large, one-time capital purchases towards tools that charge a predictable monthly subscription. Businesses can pay for what they use, scale back when necessary, and avoid the debt that a major technology investment can create.

The deeper opportunity here is consolidation. Many SMEs are already spending money across multiple disconnected tools—one for invoicing, another for customer records, another for stock tracking—none of which talk to each other. An integrated platform that handles several of these functions together, with AI built in, can actually cost less than the sum of those separate subscriptions while giving business owners a clearer picture of their operations.

With margins already under pressure, any technology a business adopts needs to visibly show an increase in productivity or bottom line. Subscription-based, integrated platforms, priced transparently and honestly, are the model that best fits this reality.

Infrastructure challenges demand a mobile-first approach

No conversation about technology in Nigeria is complete without confronting the infrastructure problem, and AI is no exception. Nigeria continues to face major infrastructure barriers, including limited broadband access, unreliable power supply, and high data costs, all of which constrain deeper AI adoption. These are structural features of the operating environment that any sensible technology strategy must account for today.

The electricity situation alone is significant. The World Bank estimates that the lack of stable electricity costs Nigeria’s economy approximately $26.2 billion annually, equivalent to about 2% of GDP, forcing many businesses to run on expensive diesel generators. That cost ripples outward.

In practical terms, AI tools built for Nigeria cannot assume a stable broadband connection or a computer that is always powered on. The tools that will actually get used are the ones that work on a smartphone, consume minimal data, and can function offline when connectivity drops, syncing back up when it returns. The mobile phone is already how many Nigerian SME owners run their businesses. AI that meets them there, rather than demanding infrastructure they do not have, is AI that has a genuine future in this market.

The direction is clear: build capability from within, using tools that make that possible. Recent AI performance research reveals that 64% of African workers are already actively using AI at work, signalling massive grassroots readiness and driving forward-thinking organisations across Nigeria, Kenya, and South Africa to aggressively prioritise internal upskilling frameworks to bridge the talent gap.

As the policy groundwork is being laid, the commercial ecosystem is beginning to respond. What remains is a clear-eyed acceptance that AI tools built for this market need to look different from those built for markets with different realities. Low cost, low bandwidth, and usability for non-technical people are not modest ambitions; they are the actual requirements. Build for those realities, and AI has a real future in Nigeria’s SME economy.

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