After facing unprecedented changes in the wake of the COVID-19 pandemic, Small and Medium Enterprise (SME) confidence in Nigeria is on the rise, according to the latest research by payments technology leader Mastercard.
The inaugural Mastercard Middle East and Africa (MEA) SME Confidence Index found 81% of SMEs in Nigeria are optimistic about the next 12 months, compared to the regional average of 74% in Sub-Saharan Africa.
Looking ahead, 78% of SMEs in Nigeria are projecting revenues that will either grow or hold steady. Over half (56%) are projecting an increase.
Access to credit, and acceptance of digital payments for future growth
As many regional economies gradually enter the normalization and growth phase, and social restrictions continue to ease, small and medium sized businesses in Nigeria have identifiedaccepting digital payments (75%), easier access to credit (72%), and doing business internationally and digitizing business operations (72%)as the top three drivers for growth.
This highlights the opportunities for small businesses that arise from both internal transformation as well as industry regulations and trends.
Making sure that SMEs have all the support they need to go digital and grow digital is a key focus for Mastercard. The company works closely with various stakeholders including the government and banking institutions to create opportunities for Nigeria’s 41 million MSMEs.
Collectively, they contribute about 50% to the national GDP, although this share could grow given that only 23% of females operate formal SME businesses in Nigeria.
Mastercard has pledged $250 million and committed to connect 50 million micro, small and medium size businesses to the digital economy by 2025 using its technology, network, expertise and resources in support of the company’s goal of building a more sustainable and inclusive digital economy.
As part of these efforts, Mastercard is focused on connecting 25 million women entrepreneurs. For many small businesses, reducing their dependence on cash through digital payments acceptance, has played a major factor in being able to get paid and maintain revenues.
Ebehijie Momoh, Area Business Head, West Africa, Mastercard, “Small businesses have faced big challenges over the past year, but one of the most important things they can do for their own growth and in terms of future-proofing their business, is to prioritize digital payments acceptance.
“It is extremely encouraging to see that Nigerian businesses are recognizing this and understanding the role that safe, secure and simple digital payments can play as they tackle the year and decade ahead with renewed optimism.
“At Mastercard, we are committed to keep SMEs connected to the tools they need to create new connections and sustainably grow commerce.”
The cost of business a key concern, whilst public and private partnerships seen as engine for growth
When asked about the main thing that keeps them up at night, 54% of SMEs in Nigeria mentioned the challenge to maintain and grow their business was their top issue.
Looking at concerns over the next 12 months, 55%identified the rising cost of doing business, while 53% cited the need for easier access to capital and funding.
Private sector partnerships (50%) and government-led initiatives (52%) were identified as having the biggest potential to positively impact SMEs and the wider Nigerian.
As consumer trends evolve in a post-pandemic world, businesses must adapt and prepare for the future. Mastercard’s Economic Outlook 2021 estimated that 20-30% of the Covid-19 related surge in e-commerce would be a permanent trend in share of overall retail spending globally.
Furthermore, recent studies from Mastercard showed that over three in four Nigerian consumers (84%) say that they would shop at small businesses, if they offered more payment options, and 81% noted being more excited to shop at retailers that can offer the latest payment methods, and an equal proportion (81%) said they would be more loyal to retailers who offered multiple payment options.
