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The role of retail banks in SMEs development, sustainability, growth


In developing countries and emerging markets like Nigeria, small and medium scale enterprises (SMEs) wield a significant impact on economic growth and development. In Nigeria, where unemployment statistics are at an all-time high, these small businesses continue to rescue the economy and the citizens with gainful employment, money generation and provision of marketable goods and services.


According to a recent report by the Nigeria Bureau of Statistics, SMEs in Nigeria have contributed about 48% of the national GDP in the last five years. With 17.4 million, they account for 84% of employment and nearly 90% of the manufacturing sector regarding the number of enterprises. Thus, the industry has, over time, grown to become an indispensable part of the economy.

Despite this, numerous issues are facing this sector, hindering its growth and dwindling the vast potentials it carries. Such issues include; access to finance, a non-conducive business environment, poor government policies and unfair tender procedures that border on corruption.


At the forefront is access to finance. Financial access has been a constant barrier to the growth and development of both the already existing enterprises and the establishment of new ones. If the sector currently underfunded contributes 48% of the national GDP, imagine the possible impact that strategic funding will yield for the Nigerian economy.

A 2010 survey report on SMEs in Nigeria conducted by the National Bureau of Statistics in collaboration with SMEDAN estimates that with adequate funding and other needs met, the SME sector in Nigeria is strategically positioned to absorb up to 80 per cent of jobs, improve per capita income, increase value addition to raw materials supply, improve export earnings, enhance capacity utilization in key industries and unlock economic expansion and GDP growth.

As it stands, the ones who hold the most power to oil the engines of these enterprises with adequate funding are the financial institutions. They play a significant role in the success of SMEs in Nigeria.

It is imperative that they understudy these businesses and identify the ones with growth potential and back them with adequate funding and financial education. Some banks are already leading the charge with their SMEs offerings. This can be seen in how many SME programs and features they have, accessibility and interest rates on loans, ease of digital banking, and handling customer-related issues.


The likes of Fidelity Bank, Wema Bank and Heritage Bank have targeted and prioritized SMEs with their products and programs, catalysing their growth. Wema Bank has built its structure around retail banking conducting transactions with SMEs and market women. They provide support by making available loans from ₦100,000 to ₦1 million without any collateral.

All the customer needs is to have steady transactions for six months in their corporate account. To display their eagerness to help SMEs, they have a loan calculator on their website helping business owners calculate their eligibility for loans and the interest rate. Heritage Bank is also playing an essential role with their Youth Innovative Entrepreneurship Program supported by the Central Bank of Nigeria. The program offers easily accessible, suitable and reasonable loans for youth Corp members, SMEs, market women and people who desire to venture into business.

Fidelity Bank, however, seems to be topping the chart for Nigerian Banks that are SME friendly. Their goal is to bridge the yawning gap for capacity building in the small and medium enterprises development space and help SMEs in Nigeria build the needed capacity for entrepreneurial success.


To help drive this goal is a suite of tailored offerings put together to position Nigerian SMEs for sustained business growth. These wide product offerings have resulted in tremendous success for the benefiting SMEs setting them up for sustainability and business success.

In line with their avowed desire to be at all times, the go-to bank for funding and allied support for SMEs powering the growth and development of the Nigerian economy, they have paved easy access to low-interest credit facilities with flexible collateral requirements.

The evidential impact of SMEs in the Nigerian economy is undeniable. Therefore, it is imperative that financial institutions invest maximally in this sector to increase their capacity to do business and help them on their journey to financial independence.


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