Study offers path to grow MSMEs

A research has shown that technological advancement, platform-based alternative models, among others hold new possibilities  for micro and small medium enterprises (MSMEs) to succeed in Nigeria.

According to the study conducted by Stears – a macro insights and analytics provider that enables quick, accurate decisions for both financial and operational opportunities in partnership with digital supply chain finance platform, Fiducia, to leverage disruptive financing options, MSMEs in developing countries could overcome current finance gap estimated by the International Finance Corporation (IFC) at $5.2 trillion.

The survey titled, ‘Platform-Enabled Alternative Supply-Chain Finance: The Case for Factoring and Reverse Factoring’, highlighted the pressing challenges faced by MSMEs in accessing funds in Nigeria, and the limitations of traditional supply chain financing solutions.

In the report presented by Stears’ duo of Co-founder & Head of Intelligence, Michael Famoroti and Senior Associate, Digital Regulations, Adaobi Oni-Egboma, the investigation indicated: “Despite their significance to the global economy, MSMEs globally face significant challenges in accessing the financing that they need, constraining their survival  and growth prospects. According to the International Finance Corporation, the finance gap in developing economies is $5.2 trillion.

The report stated: “MSMEs constitute about 90 per cent of businesses and  more than 50 per cent of employment worldwide. Formal MSMEs contribute  40 per cent of GDP to  emerging economies. Even in more advanced economies, MSMEs are significant employers, with businesses employing no fewer than 50 individuals, contributing 66 per cent of total employment in G-20 economies.

“To bridge the supply chain funding gap, disruptive financing options have emerged, driven by technology and offering benefits such as eliminating credit barriers and leveraging  alternative data to expand MSMEs’ access to finance.

“Platform-enabled factoring and reverse factoring offer a lifeline here, providing efficient methods of managing accounts, receivables, payables and ensuring financial stability and  enabling businesses to focus on service delivery. These solutions foster seamless and low-cost transactions, as well as strengthen relationships in the supply chain finance ecosystem.”

Commenting on the study, Chief Executive Officer of Fiducia, Imohimi Aig-Imoukhuede, affirmed the potential of the digital supply chain marketplace as an enabler of the MSMEs sector and a new frontier of economic diversification for Nigeria.