Technology has supposedly made 81% of Nigerian SMEs optimistic about the next 12 months

by | Jun 30, 2021

Despite systemic and infrastructural challenges facing Small and Medium Enterprises (SMEs) in Nigeria, Mastercard’s SME Confidence Index claims 81% are optimistic about revenue and growth for the next 12 months.  

The Confidence Index, the first of its kind, also shows that 74% of SMEs in sub-Saharan Africa are optimistic about the next 12 months. 

According to the Index, which was released Monday, June 28, 2021, this optimism is primarily propelled by digital modes of payment, easy access to credit facilities, and the digitisation of business models. 

However, only 300 respondents were interviewed for the survey. Compared to data from the National Bureau of Statistics (NBS), this is 0.41% of the 73,081 SMEs in Nigeria.

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Is this enough to be optimistic?

Indeed, payment modes have changed in the wake of the COVID-19 pandemic. Mastercard Payment Index of 2021 reveals that 93% of 15,569 consumers — 14,479 — will consider using advanced methods such as biometrics or QR codes.

Conducted across 18 countries, the Payment Index also shows that 63% of the consumers who used digital forms of payment did so due to the pandemic. 

Nigeria Inter-Bank Settlement System (NIBSS) also disclosed that the value of online transactions went up by 50% — ₦26.6 trillion ($77 billion)  to ₦44.3 trillion ($116 billion) — in Q3 2020. 

The World Bank’s Ease of Doing Business Report ranks Nigeria 131 out of 190 countries.  Nigeria is 15th In the Getting Credit category, its best ranking in the report’s 10 categories. 

While this seemingly corroborates what fuels optimism for growth, many SMEs in Nigeria are in the informal sector. 

Consequently, these businesses have limited access to credit facilities and government regulations because they’re not registered.

The Confidence Index also maintains that 55% of the SMEs surveyed are concerned about the rising cost of doing business, while 53% cited access to capital funding as a major concern. 

The country’s inflation rate gives little room for optimism. Per Statista, it has been higher than the average for African countries in the past five years.

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Currently, Nigeria is witnessing its highest inflation rate in the past three years.

With 98% of SMEs in the informal sector, accurately determining their confidence level poses a challenge.

But what do you think? Do you have any reason to be optimistic? Let us know in the comments.

Writer and tech enthusiast

Want to learn how to market your business and make more sales online? Register for SME Clinic 2021 and gain skills to grow your business. Get your Early Bird ticket now (offer ends soon).
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