By David Akinmola
Many Micro, Small, and Medium Enterprises (MSMEs) in Nigeria risk being shut out of access to credit due to poor borrowing habits and growing negative credit profiles, a financial expert has warned.
The President of the Money Lenders Association (MLA) and Chief Executive Officer of Trafalgar Associates, Gbemi Adelekan, made the disclosure in an interview on Sunday.
According to him, a troubling number of Nigerian MSMEs are unknowingly building reputations that may prevent them from securing the capital required to scale their businesses.
“Credit health is no longer just a financial record it’s your business passport,” Adelekan said. “It tells lenders whether to open the door or keep it shut. Unfortunately, many MSMEs don’t realise that how they borrow today determines whether they can grow tomorrow.”
Adelekan pointed to a widespread trend among borrowers particularly within the digital lending space where individuals already in debt resort to borrowing from multiple loan apps to stay afloat.
This revolving-door behaviour, he warned, leaves behind a trail of defaults that damages the borrower’s creditworthiness and is now being tracked more seriously by formal lending institutions.
“Most licensed lenders, including fintechs and banks, rely on credit reports from CBN-licensed bureaus before making loan decisions,” he said. “Once you’re flagged for defaulting even just once your chances of securing another loan, especially at favourable interest rates or reasonable terms, drop drastically.”
He revealed that his company, Kwikpay Credit, receives over 1,000 loan applications daily, but approximately 40% of those are disqualified due to poor credit histories—an alarming figure he believes reflects deeper structural issues in Nigeria’s MSME financing ecosystem.
“Poor repayment behaviour isn’t just a bad habit; it’s a growth inhibitor,” Adelekan said. “For MSMEs, where liquidity is already thin and capital access limited, maintaining a clean credit profile is critical not optional. Without it, your business struggles to raise funding, expand, or even negotiate interest rates.”
He emphasised that while MSMEs play a vital role in Nigeria’s economy contributing over 48% to GDP and employing millions their long-term viability is increasingly tied to how well they manage credit.
Adelekan also highlighted the evolving role of technology in modern lending practices. Unlike in the past where access to credit was largely collateral-based, today’s lenders spanning traditional banks, cooperatives, and fintech platforms are adopting data-driven models to assess borrower risk.
“Loan decisions now factor in behavioural patterns repayment history, number of open loans, frequency of defaults and even alternative data like income patterns and employment status,” he explained. “Credit scoring has become smarter, and it’s now harder to hide bad behaviour.”
In response to the growing concern, Adelekan announced that Kwikpay Credit is launching a new product aimed at helping borrowers restore their credit health.
The solution will offer incentives for customers to resolve past defaults, while integrating financial literacy tools to promote better borrowing behaviour.
“We’re tying loan eligibility not only to repayment history but also to factors like educational background and job stability. Our goal is to reward responsible borrowers and help others get back on track,” he added.
Adelekan’s warning comes at a time when Nigeria’s MSMEs are grappling with rising inflation, currency volatility, and dwindling purchasing power all of which have heightened their dependence on short-term credit.
As financial institutions deepen their reliance on credit profiling, experts warn that without better awareness, education, and financial discipline, a large swath of small businesses may find themselves increasingly excluded from formal credit markets.
He called on MSMEs to treat creditworthiness as a key part of their business strategy and urged financial sector stakeholders to invest in credit education initiatives that will help business owners make informed borrowing decisions.
