Data gap locks confident Nigerian SMEs out of bank credit
Nigerian SMEs are being denied bank loans despite strong revenue and high growth expectations because they lack the verifiable financial data lenders require to underwrite risk.
Nigerian small businesses are failing to secure bank loans because they cannot produce the structured financial records needed for credit assessments, according to Ovaloop Technologies CEO Princewill Mba. Speaking at a press conference in Lagos on Monday, Mba noted that many successful traders in major commercial hubs generate substantial revenue but remain excluded from formal credit markets.
This credit lockout persists even as merchant sentiment improves. A recently released Mastercard SME Confidence Index found that 81% of Nigerian SMEs are confident about the next 12 months, with 68% projecting further growth. However, 62% of respondents still cite access to credit and broader financial concerns as key challenges.
The core bottleneck is operational data rather than a shortage of capital. While Nigeria has successfully driven the adoption of digital payments, Mba pointed out that millions of businesses still rely on manual processes for inventory and accounting. Without verifiable cash flow statements, financial institutions cannot accurately evaluate loan applications.
“Businesses must first generate reliable operational and financial data that lenders can trust,” Mba said. He argued that the same policy-driven approach that digitized payments could be applied to business administration, ultimately improving access to finance, tax compliance and market transparency.
For technology to bridge this gap, it must be tailored to local market conditions, said Daniel Kilanko, Ovaloop’s chief technology officer. He noted that many existing business management solutions are built for foreign markets and fail to accommodate African realities, such as the need for offline functionality, flexible pricing, and simple interfaces for users with limited digital literacy.
Chairperson Titilope Ejimagwa added that poor inventory management and weak internal controls continue to expose businesses to fraud and limit their sustainability. She emphasized that deploying digital tools must be paired with adequate entrepreneur training to ensure the systems actually produce the reliable, internationally recognized financial reports that banks demand.
