By David Akinmola
Only 18 per cent of retailers in Nigeria have been able to access formal loans from banks and other financial institutions, highlighting the persistent financing challenges facing operators in the country’s fast-moving consumer goods (FMCG) distribution value chain.
The finding was contained in a recent FMCG industry report, which showed that the overwhelming majority of retailers continue to rely on personal savings, cooperative societies, supplier credit and informal borrowing channels to fund their businesses.
The report noted that limited access to affordable credit remains one of the biggest constraints to business expansion among small and medium-scale retailers, despite their critical role in the distribution of consumer goods across the country.
According to the report, high lending rates, stringent collateral requirements, inadequate financial records and limited financial inclusion continue to shut many retailers out of the formal credit market.
Industry stakeholders warned that the funding gap could undermine efforts to deepen market penetration, improve product availability and stimulate growth within the retail ecosystem.
The report indicated that many retailers are operating with insufficient working capital, making it difficult for them to maintain adequate inventory levels, take advantage of bulk purchase discounts or expand their operations.
Analysts observed that the challenge has become more pronounced amid rising inflation, currency depreciation and increasing operating costs, which have put additional pressure on retailers’ cash flows.
The report further showed that while financial technology firms and digital lenders are beginning to bridge the financing gap, the scale of intervention remains inadequate relative to the needs of millions of retailers nationwide.
Experts urged financial institutions to develop tailored lending products for retailers and small businesses, arguing that improved access to credit would boost economic activity, strengthen supply chains and support job creation.
They also called for greater collaboration among banks, FMCG manufacturers, development finance institutions and policymakers to establish risk-sharing mechanisms that could encourage lending to retailers.
According to the report, expanding financial access for retailers would not only enhance business sustainability but also improve the efficiency of the consumer goods value chain, particularly in underserved and rural communities.
The findings come at a time when Nigeria’s retail sector is grappling with weak consumer purchasing power and rising operating expenses, forcing many businesses to adopt cost-cutting measures to remain viable.
Market observers noted that addressing the financing challenges confronting retailers could play a significant role in strengthening the FMCG sector, which remains one of the country’s largest contributors to employment and economic activity.
