Ovaloop CEO: Poor financial records lock Nigerian SMEs out of bank credit

Co-founder and Chief Executive Officer of Ovaloop Technologies, Mr Princewill Mba, has said that many small businesses are unable to access bank loans because they cannot provide the financial records lenders require to assess their creditworthiness,

Mba stated this on Monday while speaking at a press conference on “Building Nigeria’s New Retail Economy Through Technology, Data & Policy” held in Lagos.

According to him, while Nigeria has made significant progress in digital payments, millions of SMEs still rely on manual methods to manage inventory, sales and accounting, limiting their ability to generate credible business records.

What they are saying

Mba said that many successful traders in major commercial centres generate substantial revenues but are unable to secure loans because they cannot present verifiable cash flow statements or reliable business records.

He noted that financial institutions require credible operational and financial data to evaluate loan applications, a requirement many informal businesses struggle to meet.

• “Many successful traders operating in major commercial hubs generate substantial revenue but are denied access to credit because they cannot provide verifiable cash flow records or structured financial reports,” Mba said.

He added that solving the financing challenge requires more than increasing the availability of loans.

• “Businesses must first generate reliable operational and financial data that lenders can trust,” he said.

Mba said Nigeria’s experience with digital payments demonstrates how technology can transform business operations when supported by the right policies.

He noted that many traders who previously relied almost entirely on cash transactions now routinely accept electronic payments, suggesting that similar progress is possible in inventory management and business administration.

According to him, broader adoption of digital inventory management and business management tools could help businesses improve record keeping, enhance operational efficiency and become more attractive to lenders.

He also called for policies that encourage technology adoption among SMEs, saying government efforts to improve tax compliance and formalise businesses could benefit from greater digitisation of business processes.

Need for collaboration

Mba said Ovaloop Technologies has been engaging policymakers, business associations and other stakeholders since 2023 to encourage policies that promote digital transformation in Nigeria’s retail sector.

• According to Mba, stronger collaboration between government and the private sector is necessary to build a more competitive retail ecosystem while expanding financial inclusion.

He argued that better business records would not only improve access to finance but also strengthen transparency, tax compliance and long-term business sustainability.

Localised technology important for SMEs

Also speaking, the company’s Co-founder and Chief Technology Officer, Daniel Kilanko, said many business management solutions currently available in the market were designed for foreign markets and do not adequately reflect how African businesses operate.

He said technology solutions for Nigerian retailers should accommodate local realities, including flexible pricing structures, offline operations and ease of use for businesses with limited digital literacy.

Kilanko added that business management systems capable of generating internationally recognised financial reports could improve lenders’ confidence in SMEs while helping entrepreneurs better understand their own business performance.

• Chairperson of Ovaloop Technologies, Titilope Ejimagwa, said poor inventory management, weak record keeping and employee fraud continue to undermine the growth of many Nigerian businesses.
• She noted that stronger internal controls and improved record keeping are essential for businesses seeking long-term growth and access to formal financing.

According to her, technology adoption must be accompanied by adequate training to ensure entrepreneurs are able to fully utilise digital tools in managing their businesses.

What you should know

The need for Nigerian SMEs to adopt technology for proper record keeping comes amid a renewed confidence on growth prospects for the sector.

According to the recently released Mastercard SME Confidence Index, more than eight out of ten SMEs (81%) feel confident about the next 12 months, and they unanimously agree that digital and online payments are vital in helping grow their businesses.

The report indicated that while financial concerns (62%), access to credit and inflation remain key challenges, these have done little to dampen optimism for SMEs, with 81% confident about the year ahead and 68% projecting further growth.