An enabler for SMEs digital payment



According to reports of the National Bureau of Statistics (NBS), small and medium enterprises (SMEs) are the most important group in the nation’s growth agenda, especially the import-substitution and homegrown development initiatives.

Data from the NBS indicates that SMEs contributes some of Nigeria’s national Gross Domestic Product (GDP). They account for 96 per cent of operational businesses and 84 per cent of employment.

With some 42 million enterprises, every nine in 10 manufacturing companies in Nigeria are SMEs. These underscored their importance in the critical developmental chain of personal wealth creation, national income, savings and investments and innate regenerative potential of the economy to self-stimulate national growth, even in the midst of global competition.

The World Bank Group indicates that formal SMEs contribute up to 40 per cent of GDP in emerging economies, and in countries like Nigeria with a large informal sector, the impact is higher.


Growth focus

There is a global consensus on the importance of micro, small and medium enterprises (MSMEs). This is evident in increasing efforts and mainstreaming of MSMEs agenda as primary agenda by policy makers, financial institutions, multilateral institutions, development finance agencies and regulators among others. MSMEs are at the heart of African Development Bank (AfDB)’s ‘High 5 Strategic Priorities’, which include “Feed Africa”, “Industrialise Africa” and “Improve the Quality of Life for the people of Africa”. The AfDB is committing multi-billion dollar portfolio to supporting MSMEs across Africa, including initiatives and corporate entities addressing specific challenges militating against small businesses.

Operational reports from banks and financial services providers have also shown increasing focus on SMEs, with nearly two-thirds of recent products and services by banks and allied financial services providers targeted at addressing challenges and providing supports for SMEs. The Nigerian Stock Exchange (NSE) has launched a new ‘Growth Board’ specifically targeted at SMEs. The ‘Growth Board’ provides a less-stringent window to SMEs to raise long-term capital from the capital market. However, revenue growth and financial flows are some of the criteria for assessing qualifying enterprises. Audited reports and accounts of banks have also shown increasing loans to SMEs, as part of conscious efforts to improve access to funding, a major challenge for SMEs.

Barriers to growth

President, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Hajiya Saratu Aliyu, said SMEs are building blocks of the economy and require supports to realise their potential. She noted that increasing attention on MSMEs is not misplaced as small enterprises remain strategic to Nigerian economic development.

Experts also agreed on the need for a targeted-approach towards solving challenges faced by small businesses. Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, noted that in spite of significant contributions by SMEs to the  economy, the reality and headwinds faced by operators in this segment have been quite daunting.

According to him, companies, especially small companies, have seen declining productivity rates largely caused by deficiencies in power supply; substandard trade facilitation infrastructure; lack of rightsized and right-priced financing, multiplicity of taxes, levies, fees; lack of innovation; and limited availability of requisite talent.

Group, Head, Emerging Businesses, Access Bank Plc, Ayodele Olojede, said data from a survey carried out post-COVDI-19 lockdown showed that MSMEs were impacted by cash flow, revenue and sales challenges, with the pandemic throwing up apparent lack of infrastructure and access to digital resources for small businesses.

SMEs challenge

Several companies have taken up what is generally known as the ‘SMEs challenge’, especially in the areas of finance and payment, sales growth and management and operational efficiency. A report by McKinsey & Company showed that payment is one of the key areas that have seen innovative solutions to addressing SMEs challenges. According to the report on “Harnessing Fintech Potential in Nigeria”, simplified access to allow SMEs and other corporates receive online payments from customers is one of the product development areas. Others include MSMEs lending, electronic wallets, merchant terminals, and retail lending among others. While providing a general outlook on financial technologies, the report particularly underscored the importance of SMEs and the catalytic roles of ease of financial services. According to the report, ease of online order and payment systems has considerable influence on customer acquisition and retention, thus underlining the importance of aligning with nimble and efficient payment services.    The report noted that digitally savvy, middle-aged and young affluent individuals face poor user experience on products and find the value-add from using financial products underwhelming. Users expect “speed and simplicity in their dealings with their financial service provider” and generally want a seamless system.

McKinsey & Company reports that payment-focused solutions have surged over the past two years in Nigeria with standalone operators like Paga, OPay, Cellulant, Paystack and Interswitch’s QuickTeller competing with mobile banking applications and bank unstructured supplementary service data (USSD) channels for send-and-receive transactions and bill payments. The report also noted that banking fintech solutions have seen fast followers too, including digital lending platforms from banks such as Guaranty Trust Bank and Access Bank.

According to the report, addressing SMEs’ needs for frictionless and cost-effective payments has also seen this segment becoming something of a growth area as SME payments have grown at 28 per cent compound annual growth rate over the last three years.

“Consumers are migrating to digital transactions for their financial services and most Nigerian consumers we surveyed say that they expect to increase their use of digital and mobile banking services post-crisis (post-COVID-19),” McKinsey & Company stated.

Earlier this year, Interswitch Group launched its Quickteller Business, an additional service to its existing Quickteller platform. Divisional Chief Executive Officer, Payments Processing, Interswitch Group, Akeem Lawal said the new service was in recognition of importance of digital payment to corporates, especially SMEs, which are the potential game-changers for growth and development in Africa. According to him, Quickteller Business represents a significant long-term support for economic growth as SMEs, financial services agents, and large corporates, can through the new service better navigate the challenges around payments collections, allowing them to focus on their core business.

Mastercard had earlier launched its “SME-in-a-Box” solution, which allows small business owners to move their businesses online and accept a range of digital payments from their customers. Senior Vice President, Product Management, Digital Payments & Labs, Middle East and Africa, Mastercard, Gaurang Shah said SMEs, which represent 90 per cent of businesses in Nigeria, have been deeply impacted by the COVID-19 pandemic and small business owners are facing overwhelming pressure. Shah said ‘SME-in-a-Box’ provides SME owners with a quick and simple way to digitize their business and build a platform for sustained future growth.


READ ALSO:The N600b manufacturing intervention funds are yet  to be disbursed by CBN.

Adding swift to payment

The launch of Access Bank Plc’s new digital payment service, ‘Swiftpay’,  undoubtedly, upped the ante in the digital payment services segment. Nigeria’s largest retail and tier 1 banker, Access Bank brings keen competitive advantages including large existing SMEs-based products and customer base. Swiftpay facilitates the receipt of business payments by enabling customers make quick, easy and secure digital payments on social media platforms to merchants.

Olojede said ‘Swiftpay’ was part of efforts to boost the facilitation of payments between SMEs and retail customers in the digital space.

According to her, Access Bank introduced ‘Swiftpay’ to support the digital transition and growth of SME businesses as part of the bank’s commitment to support SMEs to meet their business objectives despite the current challenges.

“The new service comes in form of a payment link that can be hosted on merchants’ social media pages and sent to anyone to pay and conclude business transactions. It is easy and takes less than five minutes for interested merchants to sign up as it is convenient and time saving for everyone,” Olojede said. Besides, ‘Swiftpay’ is free and the processing charge is discounted up to 15 per cent to ensure merchants keep most of their earnings. It also comes with enhanced security, addressing one of the concerns of businesses and users.

“In recent times, e-commerce has been challenged with the rise in fraud on social media, we have ensured that every merchant registered on ‘Swiftpay’ carries a ‘verified by access’ stamp to authenticate the page giving customers confidence when they transact.

“We have been focused on providing solutions targeted at boosting the economy because we believe it is our responsibility to contribute to the stimulation of economic growth. With the launch of “Swiftpay by Access”, we are renewing our commitment to providing the much-needed technological support to our SMEs,” Olojede said.

‘Swiftpay’ is the latest addition to a bouquet of industry-leading SMEs financial products from Access Bank, including digital lending portal, ‘Cashflow Loans by Access’, which allows business owners to remotely access loans easily at their convenience through the online platform, and ‘TraderLite’, a simpler account that enables micro businesses with turnover between N50, 000 and N1 million to operate their businesses with their individual name or registered business name. ‘TraderLite’ is a variant of the bank’s Diamond Business Advantage (DBA) account within the bank’s emerging businesses portfolio and it comes in two variants- DBA TraderLite Individual, for individuals with unregistered businesses and DBA TraderLite Business, for registered businesses. It was specially designed for micro businesses with the aim of providing financial inclusion for businesses in that segment while equipping them with the required skills to grow their businesses. DBA propositions generally include SME’s market linkages, increased referral base and networks, with networking sessions such as business clubs, business clinics, and business seminars enabling MSME customers to expand their referral base through interacting with other MSMEs.

Executive Director, Retail Banking, Access Bank Plc, Victor Etuokwu said the bank remains committed to impact SMEs positively by providing bouquet of products and services that support business growth and sustainability.

According to him, with efficient digital lending platform, which makes loan more available and convenient, specialised products and services that help MSMEs eliminate or cut down allied business costs and a seamless, fast and well-secured digital payment solution, the bank has continued to demonstrate its commitment to MSMEs. He said Access Bank’s enviable status in the Nigerian and African financial services industry makes it a better choice for SMEs, with assurance of strong financial back-up and sustainability as they progress.

“We decided to further improve our portfolio of supports for SMEs because we believe they are the future of the Nigerian economy. SMEs can provide more than enough jobs to the unemployed if empowered and we are committed to helping them realise this potential,” Etuokwu said.

Group Head, Group Retail Marketing and Analytics, Access Bank Plc, Chioma Afe, said digital solutions for SMEs and other customer segments are key points of the bank’s focus on retail financial services.

“Our edge over other financial service businesses is that we continue to leverage our global reach, with presence in Africa, Europe and Asia, strong digital capability, excellent and diverse human resource and broad experience to service our customers daily. Our clear understanding of the dynamism of the retail market and the need to stay relevant and accessible to our target audience especially in recent times with the COVID-19 pandemic lockdown is evidenced by our deployment of varied digital solutions to alleviate the challenges of the mass consumer,” Afe said.

As McKinsey and Company noted, as more customers migrate to digital services, the potential for digital services segment remains enormous. But the differentiating factors will, undoubtedly, remain efficiency, cost and sustainability.

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