For many entrepreneurs around the world, the difference between running a subsistence-level microenterprise and a small business with growth potential is being able to secure a bank loan. With a loan, an individual can buy supplies, rent space, and even employ others. Without one, they’ll be dependent on personal savings or borrowing from friends and family. Such loans can be very hard to get, however, as smaller or younger businesses tend to lack the kind of collateral and paper trail loan officers like to see. This gap between the financing needs of micro, small, and medium enterprises (MSMEs) and the availability of bank loans is often called “the missing middle.”
This missing middle problem is especially severe in Nigeria. The most recent World Bank Enterprise Survey of the country found that the most common issue cited as an obstacle by Nigerian business owners was access to finance — 30.2 percent said it was a challenge. And while worldwide, one-third of business owners reported having a bank loan or line of credit, for sub-Saharan Africa, that number dropped to about one-fifth, and for Nigeria, it was lower still at only one-tenth.
Longtime Accion portfolio partner Accion Microfinance Bank (Accion MfB) of Nigeria is a bright spot in this challenging landscape, providing almost 40,000 loans in 2017. On a recent visit, we had the opportunity to meet several of its MSME clients and hear how Accion MfB has helped their businesses grow and thrive.
Ezeh began his business selling car batteries, but as he explains, he’s been able to start offering a wider range of products. He says, “With customers needing a lot of parts, now I sell parts as well. The loan has had a good impact by allowing me to expand to a second shop and sell two main items now.” Ezeh has also been able to hire employees to operate that second location.
Chief Moses Akintunde has been able to expand his restaurant with the money he borrowed from Accion MfB. He says, “When I started, all I had was a room, now I’ve extended it. I have enough space for my customers. I have chairs so they can all fit inside. I have had times when we get very full and there’s not enough space for everyone to sit, so they stand. So it is good.” He’s been so happy with his experience with Accion MfB, he recommends it to others, he says.
Yusuf Omolara, who sells jewelry, says of Accion MfB, “They have really changed my life. When I met them, I was in my former shop, which was very small. I told them I needed money, and they gave it to me. I used the money to buy some rings. After I finished paying that loan, they increased it.” Yusuf has been with the bank for years now. “Once I’ve paid for the month, I get the next loan,” she says, adding, “I’m thankful for Accion. I remember where I started. My children were in primary school then, now one of them is in university with Accion money. I love the people who work there, too. When I’m in trouble, my friends don’t help me. Accion helps me every time!”