How Fintech lenders can help SMEs unlock post-pandemic recovery

It feels like a lifetime since the Egyptian government reported the first positive case of Covid-19 on the African continent back in February 2020.

As I write from Lagos in Nigeria where I have been based for almost the entire duration of this pandemic, I can see that there is much work to be done in rebuilding African economies as we look beyond the “new normal” of restrictions and vaccines.

While the human cost of this deadly virus is frightening, dramatic changes to our everyday lives – that have been catalysed as a result of successive lockdowns – leave us at a crossroads.

We can either choose to return to the ways we did business and interacted with one another before the pandemic, potentially risking the next global shockwave having an even more catastrophic effect on our livelihoods, or we can chart a new path.

Addressing the SME credit gap

SMEs are the backbone of all global economies but are an even more delicate and salient matter for African and other fast growing markets. The International Labour Organisation (ILO) estimates that SMEs contribute 70% of employment worldwide, while research by the Johannesburg Business School suggests that as much as two-thirds of African economies are made up by SMEs.

The latter disregards the informal economy, which is widespread across the continent, yet includes many hundreds of thousands of SMEs and jobs that are not connected to the wider economic matrix. It is fair to say that African economies are highly reliant on the fortunes of SMEs, perhaps more so than fast-growing economies elsewhere in the world.

I know from first-hand experience what a struggle it can be growing a business from the ground up in Africa. As an SME entrepreneur and business owner the multitude of obstacles can be overwhelming, including lack of reliable access to power, poor logistics and transport infrastructure, low but growing levels of internet and mobile internet penetration, and access to finance.

The global SME credit gap, which the International Finance Corporation (IFC) estimates to be $5.2 trillion (a figure not updated since before the coronavirus pandemic and now likely worse), is the challenge that Lidya and other fintech lenders have set out to solve.

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