BLOG
back
There’s a widely held belief in Nigerian financial services that lending to small businesses is, at best, a noble risk and, at worst, a guaranteed headache. The average small business owner doesn’t have the documentation and collateral — like formal financial records or assets — that lenders traditionally need to make credit decisions. Without these, traditional models can’t assess their creditworthiness, so the safest move is often no move at all. On paper, this looks like prudence. But in reality, it keeps credit out of reach for millions of businesses that are very productive and capable of repaying a loan.
At Moniepoint, we’ve spent years testing a different hypothesis: that small businesses can be creditworthy when we use the right tools to assess them. Giving businesses an inroad into the credit market doesn’t begin by lowering the bar for what it means to be creditworthy, but by building systems and processes that measure creditworthiness against how these businesses actually operate, not how legacy models expect them to.
Our hypothesis has proven to be true. In 2025, we disbursed over $700 million in loans to over 71,000 MSMEs across Nigeria. Here are some of the lessons we’ve learned from lending at scale.
Lesson #1: There are creditworthy businesses everywhere
Take Adaeze, who runs a roadside food business in Onitsha market. She’s unlikely to have a set of audited financial statements. Nor will she have a utility bill since the business doesn’t have a formal address. What she does have, though, is a POS terminal that has been processing transactions every day for the past two years and that, in itself, is a record.
A business collecting payments through a POS terminal, or even through direct bank transfers, tells you something about itself with every transaction. You learn its revenue patterns, its busy seasons, its average customer profile and much more. By analysing this data, you can build an accurate picture of business performance that’s akin to a formal financial statement.
At Moniepoint, we’ve further built our system to recognise and separate inbound business revenue from unrelated transfers.
In a perfect world, small business owners would receive only business transactions in their business account. But in reality, these entrepreneurs are also very often breadwinners. This means it’s unlikely that every naira entering an account is payment for a service. By learning to tell the difference, we can assess what a business actually earns rather than what simply passes through its account and make credit decisions grounded in reality.
But systems and algorithms are only one side of the equation, and for small businesses, they work best when combined with the other: the human layer. Humanity cannot be separated from credit decisions. A system can see that a small community pharmacy has requested a ₦5 million loan. But it can’t see the context that it’s the only pharmacy in a 5-kilometre radius and also sells provisions and everyday household items, making it indispensable to the community.
This is why field verification is important. Human officers become the bridge between the small business and the algorithm, gathering context on the ground and carrying out KYC checks that a system cannot. It is the combination of precise technological systems and sound human assessment that has allowed us to extend credit to microbusinesses that would ordinarily be overlooked by traditional models.
Read how Moniepoint is breaking barriers to credit for Nigeria’s MSMEs in our 2025 Impact Report.
Lesson #2: Solving credit for microbusinesses means solving credit for women
Across sub-Saharan Africa, women-owned businesses are overwhelmingly concentrated in the micro-segment. This is not a reflection of a lack of ambition, but rather of structural disadvantages. Due to social and legal structures, women’s ownership of collateral assets like land or property is limited. This also impacts their access to formal financing. Female entrepreneurs largely start businesses with whatever personal capital they can access, whether it's savings or contributions from family.
The gender lending gap and the micro-business lending gap are the same problem seen from two different angles. Addressing one without the other will always produce incomplete results. The industry average in Nigeria bears this out, with loan books sitting at roughly 80% male and 20% female borrowers. At Moniepoint, that split is 64% to 36%, a difference we are proud of but do not take credit for in the way one might expect.
Our stronger female participation was not the result of a dedicated women's lending initiative. It came from building systems capable of properly reaching the micro-segment. When you solve for that, you find that a significant share of the businesses you have now made reachable are run by women. The lesson here is that inclusion in lending is often less about who you are targeting and more about how deep your systems are willing to go.
Lesson #3: It takes time and stories to break the trust barrier
Many business owners are deeply proud of their self-reliance and the fact that they’ve built something entirely on their own terms without owing anyone anything. It is a value worth respecting, and it speaks to a resourcefulness that has sustained businesses through genuinely difficult conditions. But it also means that for a significant share of the market, the decision to take a loan is not simply a financial calculation. It is a cultural one.
What we have found at Moniepoint is that what moves that calculation most meaningfully is evidence. When a business owner encounters a story of someone who took a loan, deployed it, grew through it, and repaid it without incident, their perspective begins to shift. The success of someone else suddenly becomes success that is attainable to them, too.
Lending at scale has taught us that scale is only possible when there is trust, and trust is only possible when there is proof. Impact storytelling is a core part of how credit itself spreads in this market. Every documented success story is an argument for credit, made to business owners who are still sitting on the fence.
Lesson #4: Fixing the credit market is a shared responsibility
The credit gap in Nigeria is not a problem that lending innovation alone can close.
One of the more instructive observations from years of working in this space is that the countries where credit works most effectively are also the countries where credit is most deeply woven into the fabric of daily life. A credit history opens or closes doors in ways that make building a good one worth the effort. In Nigeria, that infrastructure of consequence is still being built, but it cannot be built by lenders alone.
The government has a role in creating the legislative conditions that make credit a meaningful part of how citizens and businesses access services, and in establishing the consequence frameworks that protect both lenders and responsible borrowers.
The private sector's role is to build products that meet the market where it is and where it is going, to continue reaching segments that have historically been underserved, and to be honest about the gaps that remain.
One of those gaps is the population of business owners who do not fit the traditional borrower profile. These are entrepreneurs running businesses from their phones and laptops without a storefront or a POS terminal. They are the mobile service providers, like hairdressers, barbers or plumbers, whose creditworthiness is real but whose data looks different from what current assessment models were built to read. They are the next frontier, and getting credit right for them is work we at Moniepoint consider already overdue.
When each sector takes up its responsibility in fixing the credit market, we’ll end up with one that’s significantly larger, cheaper and more equitable than what we have today. It’s a future that is possible, and it’s worth doing the work to get us there.
Final thoughts
Nigeria’s credit ecosystem would benefit from a clear, cost-effective path to resolving loan delinquency at the small-business level. Pursuing a defaulted loan through the courts is often more expensive than the loan itself, which leaves lenders with limited options and creates space for irresponsible collection practices. Neither outcome serves the market. One punishes the lender, the other punishes the borrower, and both punish the broader goal of making credit more available.
When there are no reliable consequences for not repaying a loan, the cost of delinquency often gets redistributed. Lenders price the risk of default into their interest rates, which means that the business owner who always repays ends up subsidising the one who doesn’t. This tightens access for everyone, especially responsible borrowers whose access to credit becomes increasingly limited and expensive.
Policies designed to address this need to reflect the realities of the market they are targeting. Policies that work for the micro-lending segment look different from those designed for larger commercial loans. Getting that distinction right matters enormously for whether the policies achieve anything meaningful in practice.
Getting it right, though, would change the economics of lending significantly. A functioning delinquency framework lowers the cost of risk for lenders, which, over time, lowers the cost of credit for borrowers. It creates an environment where responsible borrowing is rewarded and where the serial defaulter cannot simply move on to the next lender. It also makes it possible for the market to grow sustainably rather than cyclically.
Tobi Amira is the Business Lead, Business Loans at Moniepoint.
