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SMEs as a Key Driver to Economic Growth in an Emerging Market

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Adewale A. Adeyipo

In spite of the harsh economic conditions Nigeria is faced with, recent trends have shown there are opportunities for growth of the SME Industry in Nigeria. As reported by Nigeria Bureau of Statistics, 2019 Q1 GDP grew by 2.01%, with majority of this growth being associated with the Non-Oil Sector which is a positive sign and indicative of Nigeria’s possible diversification and less reliance on the oil sector to drive her economy.

The International Monetary Fund forecasts that GDP will increase by 2.1% in 2019, which would make Nigeria one of Africa’s slowest-growing economies and means that growth is negative in per capita terms.

While inflation is at 11.4% and has been above the Central Bank’s target of 6% to 9% for almost four years. How then can Nigeria survive the next four years of uncertainties in revenue generation, debt recovery rate, a further devaluation of Naira, low FDI flows into Nigeria in 2018, expected high fuel prices and insecurity? A recent report from Trading Economics shows that Nigeria’s all-time low of FDI inflow for 2018 Q4 was $314 million.

Nigeria’s population median age is 18 years that is made up of young, vibrant, skilled, and unskilled youths. With this youthful population and despite the tough economic conditions, I firmly believe Youth engagement through the SME approach can drive economic growth.

One of the key drivers to economic development in an emerging economy has been the successful engagement of SMEs, while the growth of economic development has been an essential goal for many developing nations of the world.

I wonder sometimes how a country with a 23% unemployment rate, inflation rate of 11.4% plans gets her citizen out of poverty which currently stand at 33.1% if not by empowering the populace that are living below the ‘Poverty Line. i.e. they live and sustain with less than $1 a day. The more people we have actively engaged, the better we are as a nation and with poverty alleviation.

The contribution of SMEs has been accepted as one of the primary supports for economic growth because of its ability to enhance economic output and improve human welfare. With so many challenges faced with SMEs in Nigeria today, low FDI inflows in 2018 is another critical indicator showing why tech firms like Google would establish an AI lab in Ghana and not in Nigeria despite current economic indicators showing that the Nigerian economy is stronger than Ghana’s economy.

Before a technological investment is made in any economy, the investing party measures the opportunity for growth, existing infrastructure, and innovation. Such parameters have side-lined Nigeria for several years. FDI inflow in Nigeria for Q1 2019 was recorded at $1.1 B (Trading Economics Reports).

Though many argue that FDI in Nigeria is usually low after a general election. The point remains that investors must see the basic amenities on ground before coming into any nation which of course stability and security is essential.

Jeff Dean’ the leading AI software engineer at Google, stated that Ghana is the ‘Future of Africa’ and it had to do with the robust network of academic institutions as well as infrastructure in place which was a significant factor on establishing an AI lab in Accra. – Aside from the ‘not too deliberate approach’ from the Government, inadequate Private-Public partnerships and collaborations amongst Government agencies.

The SMEs in Nigeria also lack access to relatively cheap and effective sources of funding, which hinders their growth and contribution to economic growth.

Agencies like SMEDAN can emulate Malaysia NSDC (National SME Development Council) as a use case where they demonstrated a positive impact on their economy since it was established in 2004.

As at 2015, the contribution of SME to the Malaysian economy was measured in terms of their share of the total number of businesses (97.3%) and share of the total number of jobs created at 59%. (Department of Statistics Malaysia)

International Finance Cooperation & World Bank’s Support on SMEs

Without a doubt, Government policies are one of the essential drivers for SMEs developments in any nation.

Two decades ago, Global Financial Institutions and Economic Organizations like World Bank and International Finance Corporation (IFC) emphasized the significance of small and medium-sized enterprises (SMEs), especially in developing regions like Nigeria, these bodies had consistently sought the support of the Government to implement policies for sustainable growth in human capital, financial inclusion, and technological advancement.

According to the World Bank Group, ‘The country partnership strategy period (FY2014-FY2019) has an investment of $8.8 billion through the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD).

Nigeria has been one of the International Finance Corporation’s (IFC) fastest growing portfolio and represents IFC’s fifth largest global country exposure, with a committed volume of $1.8 billion. Their support for Nigeria is structured around several priorities, which include promoting diversified growth and job creation with a focus on youth, women and the poor in marginalized areas; whilst improving social and financial inclusion.

It was estimated that most developing economies have a high potential in ensuring diversification, inclusiveness, and expansion of industrial production as well as the fulfillment of the fundamental objectives of development. As reported by the World Bank Group, the Country partnership period (FY2014 – FY2019) for Nigeria is expected to have achieved:

  1. 16% increase in power generation capacity; 8% increase in transmission capacity
  2. Improved access of small farmers to inputs and technology and improvement in their average income
  3. Improved road access for two million people in rural areas.
  4. Additional two million micro-entrepreneurs provided with financial services.
  5. Additional 100,000 loans provided to Small and medium enterprises (SMEs).

World Bank has estimated the growth rate for Nigeria’s economy in 2019 at 2.1% with job creation rise of 10% quarter-on-quarter if local or raw materials and resources are well utilized. SMEs depends on the use of raw materials and innovative technologies to further assist them in achieving their goal of self- reliance.

For example, Provision of starch as a raw material to the market can provide jobs for three different levels in starch production, Starch for consumption, starch for clothing, starch for pharmaceuticals. In this ecosystem, the raw material provider and the user creates more jobs and keep the SME ecosystem sustainable.

Adewale A. Adeyipo is Ag. CEO CWG Plc


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Cybervergent Expands to Three New Markets

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Cybervergent has launched version 3.0 of its artificial intelligence (AI)-native posture management platform and expanded operations into Kenya, Ghana, and SA.

The move, according to the company, introduces automated risk verification for enterprises and aims to position Africa as a force in digital governance technology.

It goes on to say the latest platform upgrade introduces continuous posture management, replacing traditional point-in-time governance, risk, and compliance reporting with real-time verification systems.

An AI engine independently verifies 99.9% of audit and monitoring findings before they appear on enterprise dashboards, according to Cybervergent.

It says risk management, compliance, audit, and data security operations are integrated into a unified system built for cloud and on-premise environments.

According to  Cybervergent, the platform maps more than 4 500 controls across frameworks, including the Nigeria Data Protection Act (NDPA), International Organisation for Standardisation (ISO) 27001, and System and Organisation Controls (SOC) 2.

Cybervergent says the rollout of its first South African customer validates the platform’s readiness for highly regulated enterprise markets and strengthens its expansion strategy across Africa’s leading technology and financial hubs.

The company is also adopting a channel-first deployment model, working with local partners and system integrators in Lagos, Accra and Johannesburg to scale verified security infrastructure for enterprises navigating increasingly complex regulatory demands.

“We built verification into the architecture,” said Ayomide Daniels, co-founder and chief scientist at Cybervergent. “If a finding is not traceable back to source documentation, it does not reach the dashboard.”

Cybervergent rebranded from Infoprivacy in late 2023 to reflect its shift towards AI-automated cybersecurity.

The start-up previously focused on data privacy compliance in the West African market before pivoting to its current integrated posture management model.


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FG Bans Honorary Degree Holders from Using ‘Dr’ Title, Warns of Academic Fraud

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Federal Government has directed recipients of honorary doctorate degrees to stop using the title “Dr.” before their names, as part of efforts to protect the integrity of academic qualifications and curb the misuse of honorary awards.

FG Bans Honorary Degree Holders from Using ‘Dr’ Title, Warns of Academic Fraud

Minister of Education, Tunji Alausa

Minister of Education, Tunji Alausa, announced the directive after the approval of the new policy by the Federal Executive Council (FEC).

Alausa said the measure was necessary to address the growing abuse, commercialisation and politicisation of honorary degrees in some tertiary institutions across the country.

He explained that honorary doctorates are symbolic recognitions of outstanding contributions to society and do not equate to earned academic qualifications obtained through rigorous study, research and examination.

“Recipients of honorary doctorate degrees are not entitled to use the title ‘Dr.’ as a prefix to their names in official, professional or academic engagements,” he said.

According to the minister, awardees may instead indicate the honorary distinction after their names using formats such as D.Litt (Honoris Causa), LL.D (Honoris Causa) or other approved honorary designations.

Under the revised policy, only universities with active doctoral programmes will be permitted to confer honorary doctorate awards.

The government also restricted recognised honorary awards to four categories: Doctor of Laws (LL.D), Doctor of Letters (D.Litt), Doctor of Science (D.Sc), and Doctor of Humanities (D.Arts).

In addition, all honorary degree certificates must clearly carry inscriptions such as “Honorary” or “Honoris Causa” to distinguish them from earned academic degrees.

The minister warned universities against indiscriminate conferment of honorary degrees, noting that institutions found violating the directive would face sanctions from the National Universities Commission and the Federal Ministry of Education.

He said the policy was part of broader reforms aimed at restoring credibility to Nigeria’s higher education system and ensuring academic titles are not misrepresented for personal, political or financial gains.

Observers say the development could reshape the long-standing culture where public office holders, business executives and celebrities often adopt the “Dr.” title after receiving honorary awards.


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Africa Fintech Revenues to Hit $65 billion by 2030 – Report

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African fintech revenues are projected to expand 13-fold to approximately $65 billion by 2030, marking the continent as the world’s fastest-growing digital finance market.

The “Beyond Payments: Unlocking Africa’s Second FinTech Wave ” report, released by Boston Consulting Group at the Inclusive FinTech Forum in Kigali, indicates the sector is shifting from transactional inclusion to scalable, infrastructure-driven systems.

While Sub-Saharan Africa accounts for 74% of global mobile money volume, more than 50% of lending still occurs through informal channels, representing a massive gap for B2B payments and data-driven underwriting.

The opportunity now is to convert scale into sustained, institutional-grade growth, says the report. Markets offering regulatory clarity and interoperable infrastructure are becoming increasingly attractive to long-term capital.

Rwanda is highlighted as an example of deliberate institutional coordination that lowers the cost to scale for financial institutions.

Forward-looking regulation and the License Passporting Memorandum of Understanding between Rwanda and Kenya are cited as practical steps toward easing regional expansion.

Financial centres like the Kigali International Financial Centre play a critical role in this next phase by reducing uncertainty for banks and investors.

By combining regulatory clarity and Pan-African integration, they reduce uncertainty for banks, fintechs, and investors, and help position markets as credible, long-term investment destinations.

Africa’s next fintech phase will be led by financial institutions, the report notes. It goes on to say banks and regulated entities are becoming the primary customers of digital financial infrastructure, demanding platforms that align with their risk frameworks.

The report identifies five institutional priorities to sustain momentum: interoperable infrastructure, data-driven credit, regulatory coherence, trust, and resilience.

Building seamless wallet-to-bank integration will enable more efficient value movement, while transforming transaction data into AI-enabled underwriting models will help bridge the gap in SME lending.

Proportional licensing frameworks and predictable supervisory practices will lower the cost to scale for innovators. Furthermore, expanding cybersecurity capabilities will ensure the ecosystem remains reliable as digital usage grows.

Africa has demonstrated that fintech scale is achievable, and the next decade will be shaped by those markets that strengthen their institutional foundations, the report concludes.

 


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