Imohimi Aig-Imoukhuede is the Chief Executive Officer, Fiducia Service Limited, with over 30 years of professional experience, which cuts across credit risk management, corporate and investment banking, corporate finance and strategy, and financial advisory. In this interview with WALIAT MUSA, he shares insights on the growth opportunities for Micro, Small and Medium Enterprises (MSMEs) in the factoring and supply chain financing industry and how this can be leveraged to grow Nigeria’s economy.

How would you describe what Fiducia does?
Fiducia is basically a digital supply chain financing platform that unlocks funding opportunities for millions of Micro, Medium and Small Enterprises (MSMEs) in Nigeria and across Africa to scale up growth and expansion. It is a financing platform where MSMEs can discount their invoices for cash speedily, enabling them to get funding, become credit worthy and enhance supply chain sustainability. MSMEs are critical enablers of economic and social development not only in Nigeria but also in the developed economies. MSMEs account for 96 per cent of global businesses and 84 per cent of employment. In Nigeria 97 per cent of businesses are in the MSMEs category. Also, MSMEs generate about six million jobs and contribute 50 percent of our GDP.

Despite their importance, lack of access to financing, affordability and flexibility remain crucial pain points. Another problem they face is lack of collaterals or credit history required to access credit from commercial banks, and the interest rates are prohibitive. There is an unmet annual N617.3bn financing gap for the MSMEs in Nigeria. Fiducia creates an ecosystem to bridge the financing gap for micro and small businesses by bringing corporates and financiers into a marketplace to drive financial inclusion and widen access to credit for MSMEs.

What are the major hurdles you need to surmount as a business providing digital supply chain finance?
Digital supply chain financing is still in the early stages of adoption in Nigeria. Also, the uptake of technology enablers in this space is quite recent. Many businesses are unaware of this alternative financing option and it is not fully understood by all parties. Adequate enlightenment of the market is a necessity; and this is high on the agenda of Fiducia as an enabler in this field.

Of course, getting financial institutions to come onboard is another hurdle. Banks typically still operate by their traditional methods; so, getting them to convert and onboard into the innovative solution that we have created is essential. As a marketplace, Fiducia is a bridge that brings the buyers, the sellers and financiers together. Buyers and sellers optimise the platform in such a way that they can generate and document their transactions in compliance with regulatory requirements without eliminating the efficiency and convenience the platform offers.

Capacity building for micro businesses is also a very important factor that Fiducia considers should be given adequate attention. The reliance on technology may exclude micro businesses with limited technology capacity and infrastructure, and this can further widen the existing funding gap inequalities for MSMEs in Nigeria. So, part of the innovative solution that Fiducia brings to the table is making the process simpler for buyers and suppliers to upscale their capabilities, within a user-friendly digital marketplace.

Given the occasional security breach issues that digital platforms face, how safe and secure is Fiducia marketplace platform?
This is a concern for any online or digital platform generally. Importantly, the safety and security of Fiducia digital platform are a critical part of our corporate core values. Safety and security of our platform is essential, so, we go the extra mile to give users of our platform peace and rest of mind while transacting business on our digital platform.

We have invested in state-of-the-art technology software and hardware that make shared personal and corporate data and information on our platform highly safe and secured. Fiducia subscribes to strictest adherence to global best practices and our commitment to data privacy and cybersecurity is very high. Our information technology infrastructure supported by an effective legal framework is a testament of our commitment to trust as reflected in our company’s name. We also have a team of dedicated professionals who have received training and certifications from the best institutions from across the world. The model we have selected has successfully and safely over $1,000,000,000, (one billion United States Dollars) of transactions over the last 4 years in different markets.

How does Fiducia hope to change the supply chain financing landscape since it’s not a new concept in Nigeria?
Supply chain financing is not a new field. In Nigeria, it’s a rapidly evolving field that underscores how technology is disrupting our world. In terms of how Fiducia will change the way things are done in this market, our platform is bringing speed to the supply chain financing system. We are widening opportunities for MSMEs to access affordable financing at a very attractive rate, and creating opportunities to choose from a variety of financial institutions. Fiducia will enable quick funding for MSMEs, accelerate the payment processes and will improve turnaround time. Convenience is another unique offering of the platform. By providing efficient working capital management and reducing cash conversion cycles, as well as hedging against price fluctuations, Fiducia is bringing new life to the business ecosystem generally.

Can you share insights from other markets; how has Supply Chain Financing (SCF) been leveraged to grow their economy?
This is a very important question because we are in a digitally-linked globalised world. The value of the global factoring market according to Factors Chain International (FCI) was USD$3,093 billion in 2021, with a global GDP penetration of 3.1 per cent. In Europe where factoring is more established, supply chain financing makes up 10 percent of the region’s GDP. Also, a PwC report put Africa’s factoring market value at €22.1 billion with capacity to unlock between $1 billion to $2 billion annually in funding for MSMEs.

Now, let’s look further into Africa; while factoring volumes consistently grew across regions post COVID-19 (2020 – 2022), Africa showed the highest three-year growth rate of 65.7 percent. South Africa and Morocco accounted for the bulk of Africa’s factoring volume. An analysis by the World Bank on 48 countries including 23 middle-income countries also found that factoring may be a substitute for lending in countries where it is more difficult to enforce collateral and enforce repayment in case of default. Interestingly, this is even without prejudice to countries that have good credit information availability.

Coming to Fiducia marketplace is an opportunity for MSMEs to unlock more funding. Banks also have an opportunity to improve their credit quality and reduce their capital requirements while expanding their asset portfolio to more borrowers across all economic sectors because now, they do not have to rely solely on the credit worthiness of the MSMEs.

Talking about partnership, the SCF gap in Africa is wide; are there plans for either collaborations or partnerships to serve the needs of other African markets?
Africa’s potential is huge as one of the world’s fastest-growing consumer markets. Africa’s large landmass and demographics – 1.4bn people – make the continent an important consumer market with a projection to reach $2.4trn by 2030. It is also a plus for supply chain financing. As a pioneer in the supply chain finance digital marketplace, Fiducia is envisioning an Africa-wide market for digital supply chain financing. And our operation is supported by a network of experienced funding partners and Africa’s top developmental finance institutions.

What are your plans towards creating and deepening awareness of digital supply chain financing in Nigeria and Africa at large?
The encouraging story of the rollout of our innovative marketplace solution in Nigeria is a positive narrative we feel proud to share with prospective users of our platform, both in Nigeria and across Africa. Fiducia marketplace is a home-grown solution and it is a proudly African innovation. We believe that, as we continue to share knowledge and experience with the Nigerian and African business community, more MSMEs in particular will come onboard and adopt this alternative funding model.

Research and development is also a critical area that we are investing in substantially. An example is the collaboration we had with Stears recently, where in-depth research and analysis of the state of Supply chain finance was examined. A report from this project is available to the public on our website and the Stears website. We want to be able to scale the number of sectors and industries that we can solve problems for through our alternative innovative solutions. As an enabler in this field, adequate education and enlightenment of the market is something that is high on our agenda.

The company was launched two months ago; how much does Fiducia own so far and what are your plans for the short, medium and long term market expansion?
As Africa’s largest economy, Nigeria is a strategic economic hub for the global economy, as well as a big market for supply chain financing. There is an unmet N617.3 billion financing gap for MSMEs according to the Central Bank of Nigeria (CBN) 2018 statistical bulletin. About 0.3% of total commercial banking credit has been reported to be available to micro and small businesses. So, over the past few months that we rolled out our innovative digital marketplace, we have been able to close some gaps in terms of educating the market about the need for alternative platform-enabled funding models. We are strategically increasing public awareness and knowledge of our product, and we have started looking at how we can develop more solutions to support businesses across a variety of sectors and industries. By and large, Nigeria offers immense market opportunity for digital-enabled supply chain financing in view of the high number of MSMEs most of which require access to funding to scale.
What challenges is Fiducia out to solve and of what benefit is it to corporate organisations, businesses, suppliers and consumers?
The lack of access to affordable credit is the biggest challenge micro and small businesses in Nigeria and Africa face. MSMEs continuously seek quick liquidity to scale their operations but oftentimes are unable to meet the stringent requirements to access credit from the traditional financial institutions. At times, in commercial terms negotiation, corporates and MSMEs have conflicting objectives. Financial organisations often consider giving loans to micro and small businesses a risky venture. Friction can even damage relationships, and ultimately increases costs and risks to both parties.

Fiducia digital marketplace eliminates these barriers in many ways. It enables MSMEs unlock cash from corporates by automated discounting of validated digital invoices. The digital platform allows extended payment terms for buyers, and enables MSMEs to accelerate collection of their receivables, gaining with immediate liquidity at a more affordable interest rate. Another benefit is that it enables corporations to improve their commercial terms with MSMEs without harming the existing relationship.

The financing platform provides financiers a viable platform with a range of financing and risk mitigation solutions. With Fiducia, financiers have an opportunity to improve their credit quality and reduce capital requirements, while expanding their loan portfolio to more businesses across economic sectors because now, they do not have to rely solely on the credit worthiness of the MSMEs. Earlier payment through smart supply chain financing products enables revenue growth and improved service delivery for SMEs, creating a win-win solution for both parties.