By Ayomide otitoju
Access Bank has secured a crucial $295 million loan package from FMO, the Dutch Entrepreneurial Development Bank, aimed at bolstering small and medium enterprises (SMEs) across Nigeria. This significant financial boost is part of a broader strategy to position Access Bank as a leading supporter of SMEs, with a focus on businesses run by women and young people.
Nigeria, Africa’s most populous nation, is home to nearly 40 million Micro, Small, and Medium Enterprises (MSMEs), which constitute 96% of all businesses in the country. These enterprises contribute 49% to Nigeria’s Gross Domestic Product (GDP) and employ 84% of the national workforce, according to PwC’s MSME Survey 2020. Despite their critical role in the economy, these firms often face significant challenges in securing funding due to high-interest rates, stringent collateral requirements, and limited access to formal credit systems. These obstacles have stifled the growth potential of many SMEs, preventing them from expanding or innovating effectively.
The new capital infusion from FMO is expected to alleviate these challenges by providing much-needed working capital and financing to SMEs across various sectors, including agriculture. Access Bank’s approach goes beyond mere financial support; it also includes capacity building and networking opportunities essential for sustainable growth.
SMEs in Nigeria operate in a challenging environment, grappling with poor infrastructure and macroeconomic instability, including fluctuating exchange rates and inflation. These factors complicate long-term business planning and execution. Moreover, many SMEs lack the financial literacy necessary to navigate formal financial systems, making them less attractive to traditional lenders.
Access Bank has a proven track record of supporting SMEs in Nigeria. For example, in 2019, the bank provided a $10 million loan to a small-scale agricultural enterprise in northern Nigeria. The funds were used to expand operations, purchase modern farming equipment, and enhance the supply chain, resulting in increased output and the creation of over 500 new jobs in the local community. This case highlights how targeted financial support can drive growth and job creation in underserved regions.
Another notable initiative is Access Bank’s Womenpreneur Pitch-a-ton programme, the first of its kind in the industry. Launched in 2019, the programme provided free mini-MBA certifications to 50 women entrepreneurs in Nigeria and financial grants worth N9 million to the top three applicants, in collaboration with the International Finance Corporation (IFC). The programme has since expanded to 10 other African countries and awarded Mini-MBA training to 645 women entrepreneurs, with over $175,000 in grants distributed across Africa. This year, the programme is set to provide mini-MBA certifications to 120 more women entrepreneurs and grants worth over N17.5 million.
Economic Impact of Funding SMEs
The financing secured by Access Bank is expected to have a transformative impact on the Nigerian economy, particularly in the following areas:
Job Creation: The capital provided to SMEs will enable business expansion, leading to job creation. With MSMEs being the largest employers in Nigeria, this could significantly reduce unemployment and improve the livelihoods of millions of Nigerians.
Economic Diversification: By supporting SMEs across various sectors, particularly agriculture, the funding will help diversify Nigeria’s oil-dependent economy, contributing to a more balanced and stable economic structure.
Empowerment of Women and Youth: Focusing on businesses led by women and youth will promote inclusive economic growth, ensuring that these often-marginalized groups have the resources needed to maximize their productivity and contribute to community development.
Strengthening Supply Chains: SMEs play a crucial role in Nigeria’s supply chain, especially in agriculture, manufacturing, and retail. The funding will help these businesses maintain and expand operations, improve supply chain efficiency, and reduce bottlenecks.
Financial Inclusion: The funding will deepen financial inclusion by integrating more underperforming SMEs, particularly in rural areas, into the formal financial sector, enhancing their growth potential and contributing to financial system stability.
Innovation and Competitiveness: With better access to finance, SMEs can invest in new technologies, improve products and services, and enhance their competitiveness both locally and globally.
Access Bank’s Managing Director/CEO, Roosevelt Ogbonna, expressed optimism about the loan’s potential to strengthen the bank’s capital reserves and bolster African trade and exports. “By utilizing this fund, we aim to promote sectorial growth, encourage business expansion, create employment, and enhance financial inclusion,” Ogbonna stated.
Benson Adenuga, Chief Operating Officer and Director of Nigerian Affairs at BII, highlighted the importance of this partnership in accelerating Nigeria’s recovery and empowering businesses that are pivotal to job creation, innovation, and economic diversification.
This investment aligns with the United Nations’ Sustainable Development Goals (SDGs) 5 and 8, focusing on gender equality, decent work, and economic growth. It is seen as a crucial step towards ensuring that Nigeria achieves an inclusive and sustainable future.
British Deputy High Commissioner Jonny Baxter underscored the broader implications of the investment, noting that economically empowering smaller businesses and women entrepreneurs has a ripple effect that benefits entire communities.
Since 2018, BII has supported Access Bank’s ambitious expansion plans across Africa with both direct and indirect investments. This latest commitment, along with backing from other development finance institutions such as BIO, Blue Orchard, FinDev Canada, FinnFund, Norfund, Oikocredit, and Swedfund, further solidifies Access Bank’s role as a key driver of economic development on the continent. As Access Bank continues to deploy this strategic funding, it is expected to stimulate business growth, create jobs, deepen financial inclusion, and contribute to Nigeria’s continued economic progress.
