Over 95% of Nigerian MSMEs Lack Formal Credit Access, Says Finance Minister Edun
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has disclosed that less than five per cent of Nigeria's micro, small and medium enterprises (MSMEs) have access to formal credit. He attributed this critical gap to traditional credit models that demand collateral, which most small businesses cannot provide.
Launch of CycleFlow Nigeria as a Solution
Speaking at the launch of CycleFlow Nigeria, a nationwide working capital platform in Lagos, Edun hailed the initiative as a decisive solution to the financing constraints plaguing MSMEs. Represented by the Director-General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, he noted that the platform has the potential to unlock up to $25 billion annually for the sector.
Edun emphasized that the financing gap for MSMEs remains a major structural barrier to the growth of millions of businesses across Nigeria. Despite accounting for approximately 50 per cent of the country's gross domestic product (GDP) and employing a large share of the workforce, MSMEs continue to struggle with accessing capital necessary for expansion.
The Paradox of MSME Financing
According to Edun, billions of naira in legitimate receivables are trapped within the balance sheets of large corporate buyers, while smaller suppliers face cash flow constraints due to delayed payment cycles. "This is the paradox at the heart of MSME financing in Nigeria. Businesses that have delivered goods and services to large, creditworthy buyers cannot access the cash that is rightfully theirs, while those buyers sit on approved payables that take 30, 60 or 90 days to settle," he stated.
CycleFlow is designed to address this challenge by enabling suppliers to convert approved invoices into immediate cash without the need for collateral, lengthy loan applications, or complex documentation processes. Powered by C2FO and supported by a $30 million funding round from the International Finance Corporation (IFC), the platform allows suppliers to access early payments and bypass traditional credit constraints.
Government and International Support
Edun highlighted that this initiative aligns with the Federal Government's broader economic agenda, which aims to translate macroeconomic stability into inclusive growth, job creation, and improved access to finance for small businesses. He also disclosed plans to integrate 10 million Nigerians into productive economic activity as part of the government's social development agenda, stressing that MSME empowerment is central to achieving this goal.
Regional Director for Central Africa and Nigeria at the IFC, Dahlia Khalifa, noted that about $25 billion in working capital is currently locked in payment cycles between large enterprises and their smaller suppliers. She explained that suppliers often wait up to 90 days or more for payment, which limits reinvestment, reduces productivity, and slows business growth. "That is capital that cannot be reinvested, jobs that cannot be created or even maintained in some cases, and productivity that is lost," she added.
Platform Mechanics and Job Creation Potential
Khalifa detailed that the platform provides a digital, data-driven solution connecting large corporations, MSME suppliers, and financial institutions, enabling businesses to access early payment on approved invoices. "For MSMEs, this means immediate liquidity to restock, to hire, and to grow," she said. Stanbic IBTC is the first Nigerian financial institution to integrate with the platform, offering naira-denominated financing, with more institutions expected to join.
Chairman of CycleFlow, Segun Ogunsanya, stated that the initiative directly targets the structural financing gap faced by SMEs, which account for a significant share of businesses and employment across Africa. He pointed out that access to affordable working capital remains a major constraint due to traditional lending models requiring collateral and credit histories that many small businesses lack. "Our platform leverages the stronger credit profile of large buyers to unlock financing for suppliers," he explained.
Ogunsanya added that the system allows MSMEs to receive early payment on invoices within a short period without collateral or extensive documentation. "For businesses waiting 60, 90 or even 120 days for payment, this access to liquidity is transformative," he remarked. Citing IFC projections, he indicated that for every $1 million in working capital released, about 16.3 new jobs could be created over two years. At full scale, the platform could generate over 480,000 direct jobs, with a broader multiplier effect supporting more than 2 million indirect jobs across the economy.
Broader Economic Impact
Chief Executive Officer of C2FO, Sandy Kemper, emphasized that the platform addresses inefficiencies in traditional financing by directly matching accounts payable with accounts receivable through a marketplace model. He noted that globally, large volumes of cash remain trapped in receivables due to delayed payment structures, limiting business expansion and job creation. "Our ability to match those who need capital with those who can provide it, without the intermediation of credit risk, is what makes this model effective," he said.
Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, described the initiative as timely, noting that access to working capital remains one of the most pressing challenges for Nigerian businesses. She affirmed that the platform would improve liquidity across supply chains, strengthen relationships between large firms and small suppliers, and enhance efficiency within the business environment.
