For decades, support to startups and small businesses (grouped under the acronym MSMEs) in Nigeria has been less than required, owing to a lack of proper bankable business structure, deficient collateral requirement, and low margins needed to attract funding from commercial banks. Wema Bank, however, seems intent on shaping a new reality for small businesses in Nigeria.
Wema Bank, the innovative lender behind Africa’s first fully digital bank ALAT, has over the years been passionate about supporting micro, small and medium-sized businesses in Nigeria. But over the last six months, it has reviewed the way it backs MSMEs by delivering sustainable and value-adding support that impacts positively on business growth and profitability.
One of these offerings, the My Business Account Suite, was recently reviewed to improve cost-effectiveness and deliver maximum convenience. It is a current account product with a concessionary transaction fee and ‘Zero Account Maintenance Fee’ for Startups and medium-sized businesses. Businesses can also earn interest on funds domiciled in this current account.
The Bank is also bringing businesses together for capacity building programmes, designed to enhance structuring and spur growth. In July, the Bank sponsored several small and medium scale businesses to a session on building sustainable wealth, organized by PwC in Lagos. The training featured experts from key growth sectors as well as business managers and successful entrepreneurs. Discussions and insights were shared, and these experts touched on critical aspects of business building including bookkeeping and accounting to tax efficiency, raising funds for business and much more.
Though these training and product offerings help, funding remains critical to growth, particularly for MSMEs. Access to cheap funding continues to limit the ability of small businesses in Nigeria to scale adequately. This narrative can be changed with the new partnerships Wema Bank has entered.
The Bank recently entered into partnerships with Development Bank of Nigeria (DBN) to improve access to cheaper funds for small businesses. DBN is a licensed wholesale Development Financial Institution(DFI) set up by the Federal Government of Nigeria in collaboration with other international development partners to alleviate the financing constraints of the Micro Small and Medium Scale Enterprises (MSMEs) in Nigeria.
DBN will fund MSMEs through Participating Financial Institutions(PFIs). Wema is one of those selected. Through this partnership, MSMEs and Commercial businesses of all business segments can be availed up to N153million and N610million respectively. As a bank that prioritizes support for smaller businesses, Wema Bank was the first commercial bank to disburse this loan. The DBN offering is available to both new and existing business customers. New customers can visit any Wema nearest branch for enquiries and loan processing.
A similar arrangement exists with the Bank of Industry BOI to further enhance funding to micro-businesses in the service sector, manufacturing, Agric value chain and to Traders of locally made goods at an affordable rate. Wema Bank also recently secured $35 million from the African Development Bank and ICD to fund small businesses across the country.
While access to cheap funds is great, access to new markets offers even more promise. Expanding into new markets via traditional means requires substantial capital outlay, which most smaller businesses lack. To ensure MSMEs can scale efficiently, Wema Bank has unveiled a simple, self-onboarding payment gateway platform for merchants to receive payments on their website seamlessly. This ensures small businesses can market their products and services to a wider community of potential customers, digitally, without having to incur additional cost on setting up new offices and managing operations from several locations.
The Nigerian economy is driven, significantly, by a vast number of SMEs and as a financial institution committed to wealth creation, the Bank seems keen on changing the prospects of these businesses and appears unrelenting its pursuit to build the smaller businesses of today into reputable multinationals of tomorrow.