• Rapidly increasing social media penetration in Nigeria is prompting SMEs to establish an online footprint, with social media increasingly the de facto online storefront to compete and drive sales
  • E-wallets are making significant in-roads, catalyzing SME digitization and enabling businesses to receive digital payments and increase operational efficiency 
  • A significant portion of SMEs in Nigeria do not have formal SME bank accounts due to high fees and account minimums posing valiant obstacles.


A new study from Visa, the SME Megatrends report, delves into the ever-evolving financial landscape for Small and Medium Enterprises (SMEs) in Nigeria. The report identifies significant opportunities for growth and innovation, particularly in the digital and financial domains, with clear insights that can be leveraged by issuing banks to unlock new revenue opportunities and gain a competitive edge.

Businesses in Nigeria are in the midst of significant transformation, as high internet and social media penetration incentivize SMEs to build an online presence and growing e-wallet use spur digitalization. This is creating a latent demand for SMEs to develop online presence and ecommerce capabilities to reach new customers, with a need for robust and simplified tools to enable access. However, SMEs remain underfunded and underbanked, requiring access to formalized credit to expand businesses and meet day-to-day cashflow constraints.

Rapid digital acceleration in Sub-Saharan Africa’s SME sector presents a wealth of new revenue opportunities for issuing banks who, by facilitating access to essential financial products and services, can tap into this potential, leading to an expanded customer base, increased transaction volumes, and heightened revenue prospects within the digital payments landscape. By working in partnership with Visa, issuing banks can deliver bespoke financial products tailored to SMEs' unique needs to promote inclusive economic growth actively.

Andrew Uaboi, Vice President, and Head of Visa West Africa, remarked, “At Visa, we are dedicated to empowering issuing banks to tap into the vast potential of SME financing, focusing on bridging the critical funding gaps that impede SME growth - an approach that involves transforming challenges into tangible opportunities. We are confident that the insights provided by the SME Megatrends report will empower banks to enhance their services. Through strategic partnerships with these banks, we aim to offer the essential resources required to develop tailored financial solutions that meet the specific needs of SMEs."

The Visa SME Megatrends report serves as an indispensable tool for issuers to better understand SME needs while identifying actionable strategies to customize their offerings for this market segment. Crucially, the report reaffirms Visa's unwavering commitment to expanding SMEs' access to the digital economy, fostering a resilient and mutually beneficial business environment for all stakeholders.

 

Spotlight on Nigeria’s SME landscape

Key insights from the Nigeria SME Megatrends report:

1.     Greater Desire for Formalized Financial Services: SMEs in Nigeria remain heavily underserved and underbanked. With SME card penetration at a nominal level, businesses seek improved access to accessible, affordable formal financial services.

2.     Need For Easier Access to Credit to Facilitate & Optimize Cash Flow: A considerable amount of SMEs rely on personal loans and informal credit, as they face obstacles and requirements that make it difficult to secure loans from banks and other formalized lending institutions. 

3.      Integration with Social Media Platforms & Communication Tools to Drive Sales: Nigeria’s digital advertising landscape is evolving quickly, contributing to the growth of e-commerce and digital payments. Streamlined and user-friendly tools are helping SMEs establish an online footprint to compete and drive sales.

4.     E-Wallets are Playing a Growing Role in Digitizing SMEs: E-Wallets are building ecosystems where consumers and businesses interact and  are well-positioned to increase digital and payment card acceptance among SMEs.

5.     SMEs Need Support To Build an Online Presence: The rapid growth of mobile and internet penetration in Nigeria is creating a latent demand for SMEs to develop online presence and ecommerce capabilities to reach new customers, with a need for robust and simplified tools to enable access.

6.     Moving Towards Real-Time Payments: As real-time payments expand, SMEs will come to expect to pay and be paid faster.

7.     Investment in SME Digitization Tools is Increasing: Lack of digitization remains a major challenge for SMEs but a growing fintech ecosystem is bringing new, locally oriented digitization tools to market.

Empowering the Ecosystem, Powering Growth

Visa recognizes the pivotal role of SMEs in driving economic growth and is committed to integrating them into the digital economy. Through its extensive network, innovative business solutions and value-added services, Visa collaborates with issuing banks to facilitate SME access to digital tools and financial services, bolstering the digital transformation of SMEs.

Visa has already digitally enabled nearly 67 million SMBs worldwide, leveraging its extensive expertise and partner network, exceeding our three-year goal of digitally enabling 50 million SMBs globally. This achievement underscores Visa's profound expertise and the strength of its partnerships. By pinpointing ways for issuers to provide SMEs with vital financial products and services, Visa seeks to foster economic growth collaboratively. This effort not only aids SME development but also contributes to a flourishing cycle of prosperity, offering substantial benefits for the economy at large.

 

Read Visa’s Nigeria SMEs Megatrends report here https://globalclient.visa.com/SME_Africa_Megatrends, and discover how Visa’s SME products and services can be leveraged by issuers in the country.

Visa (NYSE: V) is a world leader in digital payments, facilitating transactions between consumers, merchants, financial institutions, and government entities across more than 200 countries and territories. Our mission is to connect the world through the most innovative, convenient, reliable and secure payments network, enabling individuals, businesses and economies to thrive. We believe that economies that include everyone everywhere, uplift everyone everywhere and see access as foundational to the future of money movement. Learn more at Visa.com.