By Juliet Umeh

Access to structured financing remains one of the biggest barriers preventing Nigerian small and medium-sized enterprises, SMEs, from reaching their full potential and contributing more significantly to economic growth, according to financial experts.

Director of Merchant Lending, Seun Oyediran, said despite accounting for the overwhelming majority of businesses in Nigeria and contributing substantially to employment and Gross Domestic Product, GDP, many SMEs continue to struggle with limited access to capital needed for expansion and daily operations.

Oyediran, in a statement on the importance of structured merchant financing, described the situation as a major constraint to business growth and economic development.

According to him, Nigeria’s economic landscape is powered largely by SMEs, ranging from supermarkets in urban centres to distribution businesses serving rural communities.

He said: “A recurring theme in economic discussions is the existence of the ‘missing middle’. While demand remains strong across sectors, access to financing remains one of the major constraints affecting SME growth, effectively limiting how much the country’s economy can expand.”

Citing data from the Small and Medium Enterprises Development Agency of Nigeria, SMEDAN, he noted that SMEs account for about 96 percent of businesses in Nigeria, contribute nearly half of the country’s GDP and employ more than 80 percent of the workforce.

“SMEs are not merely a segment of the economy; they are the economy,” he stated.

However, he pointed out that a significant credit gap continues to hinder many businesses from scaling operations, meeting customer demand, expanding their market reach or maintaining adequate inventory levels.

According to Oyediran, merchant credit has emerged as one of the financing models capable of addressing some of these challenges.

Unlike conventional commercial loans, he explained, merchant financing is designed specifically to support business activities such as inventory replenishment, equipment acquisition and expansion.

“For many merchants, an inability to stock goods does not only translate to lost sales but also loss of market share and weakened cash flow. Access to working capital at critical moments can make the difference between growth and stagnation,” he said.

He further noted that advancements in digital financial services are helping lenders assess SME creditworthiness beyond traditional collateral requirements.

According to him, data-driven lending models now enable financial institutions to evaluate businesses based on operational performance and transaction history rather than relying solely on fixed assets.

He argued that wider access to responsible and flexible financing solutions could generate broader economic benefits, including increased business activity, job creation and enterprise growth.

“As Nigeria seeks to diversify its economy beyond oil and gas, SMEs must remain at the centre of economic development efforts. To build globally competitive businesses and export-oriented enterprises, we need to move beyond merely talking about supporting SMEs and focus on integrating them into modern credit systems,” Oyediran added.

He stressed that many local businesses possess the ambition and market opportunities required for expansion, but often lack the capital needed to take the next step.

“The gap between a small local business and a regional champion is rarely a lack of ambition. More often, it is limited access to financing. If we are serious about developing the next generation of African industry leaders, flexible and data-driven financing solutions must become a priority,” he said.

He maintained that when properly structured and responsibly deployed, merchant credit can help eligible businesses improve inventory management, strengthen operations and support long-term growth.