Nigerian SMEs Gain Access to Loans Without Collateral

Accessing business loans without collateral is increasingly possible for Nigerian small and medium enterprises (SMEs), which represent 96% of businesses and contribute nearly half of the country's Gross Domestic Product (GDP). The World Bank estimates that 40% of Nigerian SMEs cite lack of credit as a major constraint to growth.

Traditional lenders often require collateral, but a shift is occurring, particularly with fintech companies. Digital transaction records, such as bill payments and mobile transactions, are being used by lenders like Regxta Microfin to assess creditworthiness based on financial profiles rather than collateral.

Bello Rukayat, Chief Executive of Regxta Microfin, stated that transaction data provides insights into business performance, revenue patterns, and cash flow stability. However, approximately 26% of Nigerian adults remain financially excluded, lacking access to formal financial services.

The Credit Bureau CRC is also working to strengthen the system by creating trails of repayment data for future lenders.