Globally, Small and Medium-sized Enterprises (SMEs) are the backbone of economies, driving innovation and job creation, yet they consistently face a chronic lack of access to crucial working capital. This challenge is even more pronounced in Nigeria where SMEs account for over 90% of businesses, contribute nearly 48% of Nigeria’s GDP, and employ more than 80% of the workforce. Despite their significance, they remain severely undercapitalized. In an environment defined by delayed payments, expensive loans, and inflationary pressures, many SMEs operate with tight cash flow, which hinders their ability to grow, compete, and innovate.
Traditional finance hasn’t served them well. They often require extensive collateral, lengthy application processes, and high interest rates. For many small businesses, that’s a dead end, and so many SMEs find themselves on the brink, not because they lack opportunity, but because they lack liquidity.
A shift is underway: Supply Chain Finance (SCF) is becoming a lifeline for these businesses — enabled by digital platforms and powered by collaboration between Buyers, Suppliers, and Financiers. SCF is helping Nigerian SMEs unlock liquidity trapped in their invoices. SMEs can now access the capital they’ve earned, when they actually need it.
And in today’s economic reality, that access can mean the difference between scaling and shutting down.
What Exactly Is Supply Chain Finance?
Let’s break it down further to understand why it’s gaining traction. Supply Chain Finance is a financing solution that helps suppliers get paid faster, without putting pressure on buyers. Here’s how it works: an SME (Supplier) delivers goods or services to a large Buyer, invoices the Buyer, and rather than waiting 60 – 90 days (or more) for payment, gets paid almost immediately by a third-party Financier. The Buyer pays the Financier later.
The magic here is that the SME is able to leverage the creditworthiness of their Buyer to access financing. Unlike a loan, SCF doesn’t add debt to the Supplier’s balance sheet. It is not based on collateral or credit history provided by the Supplier. Rather, it is based on the strength of the Buyer. A valid invoice from a credible Buyer becomes a financeable asset, that unlocks liquidity for the Supplier without adding debt to the Supplier’s balance sheet.
Common Models of Supply Chain Finance
As supply chain finance gains momentum in Nigeria, three core models are emerging as the most impactful for SMEs:
- Factoring: In this model, a financier purchases the SME’s receivables, typically invoices at a discount, providing immediate working capital. The financier then collects payment directly from the buyer at the invoice maturity date or due date.
- Reverse Factoring: In this case, it is the buyer that initiates the financing process. Once an invoice is approved, a financier pays the supplier early, and the buyer repays the financier at the invoice maturity date or due date.
- Dynamic Discounting: Unlike the above 3rd-party financed factoring models, dynamic discounting allows Buyers to pay Suppliers early using their own surplus funds. This benefits both Buyer and Supplier. Suppliers get faster access to cash, while Buyers improve Supplier relationships and strengthen their supply chain.
The key difference between SCF and loans? SCF doesn’t leave SMEs with debt. It simply gives them faster access to money they’ve already earned, converting receivables to cash, and removing friction in the value chain.
Why Traditional Lending Falls Short.
The structure of commercial lending simply isn’t built for the agility SMEs require. Most banks are risk-averse, and Nigeria’s credit infrastructure (as regards SMEs), though improving, is still limited in terms of transparency and reach. (This is increasingly being addressed by the current regulatory environment, and we expect to see favourable impact in this regard).
Meanwhile, most SMEs operate on thin margins, rely on delayed buyer settlements, and face unpredictable operating costs. These dynamics make them risky in the eyes of many traditional lenders.
Worse still, when SMEs are forced to rely on informal lenders or expensive credit options, they end up in a cycle of debt and dependency, undermining their growth and the broader supply chain.
Traditional lending has proven too slow and restrictive for SMEs. Technology is now stepping in to bridge the gap by digitizing processes, enhancing transparency, and making supply chain finance more accessible than ever before.
How Technology Is Scaling Access to SCF
In the past, SCF was a manual, bank-led solution limited to large corporations and Tier-1 suppliers. But with platforms like Fiducia, the model has evolved into a tech-enabled ecosystem that brings together suppliers, corporates, and financiers in real time.
Here’s what that looks like:
- Automated onboarding for suppliers, often with appropriate KYC requirements
- Digital invoice verification and transaction tracking
- Real-time risk scoring and matching with financiers
- Transparent terms and immediate disbursement options
The Fiducia platform reduces administrative burdens, eliminates financier bias in credit allocation, and empowers financiers to lend with confidence using data, not guesswork. With this model, even a mid-sized supplier in a remote market can access liquidity within days of fulfilling an order—backed by the strength of their buyer’s payment terms.
Take the example of a plastic packaging manufacturer in Lagos that supplies to a major FMCG brand. With rising input costs and extended payment cycles, the company struggled to maintain resupply of inventory and meet increasing demand.
Here’s how they used Fiducia’s platform to unlock working capital:
- Invoice Upload: After delivering goods to the FMCG buyer, the supplier uploaded the confirmed invoice to the Fiducia platform.
- Buyer Confirmation: The buyer validated the invoice electronically, confirming that the goods were delivered and the invoice was payable.
- Financier Matching: Fiducia’s system matched the transaction with an onboarded financier willing to advance funds based on the buyer’s creditworthiness.
- Early Payment Disbursement: Within 48 hours, the supplier received the discounted value (sometimes up to 100%) of the invoice value directly into their account, without collateral or a loan application.
- Repayment: On the agreed due date, the buyer repaid the financier, completing the transaction. In some cases, the due date can be extended, giving the buyer additional flexibility while ensuring the supplier has already been paid.
The result? The supplier resupplied successfully despite adverse rate movements, ramped up production, fulfilled larger orders, and grew revenue by over 30% in less than a year, all without taking on new debt.
This isn’t an isolated case. it’s a glimpse into how digital supply chain finance is unlocking measurable growth for businesses that have long been financially excluded. This success story illustrates what’s possible when the right tools, partners, and technology come together. But for supply chain finance to reach more SMEs across sectors and regions, it can’t rely on isolated adoption. The ecosystem around it must evolve.
What Needs to Happen Next?
To unlock the full potential of supply chain finance for Nigerian SMEs, the entire ecosystem: regulators, corporates, financiers, and platforms must evolve together:
- The Central Bank of Nigeria (CBN) is already prioritizing development of clearer regulatory framework for SCF.
- Developmental finance institutions can play a catalytic role by offering risk-sharing tools and guarantees that crowd in private capital and reduce the perceived risk of lending to SMEs via SCF.
- Large corporates must lead by example—embedding SCF into their procurement and payment processes to strengthen supplier networks and create shared value across their supply chains.
- Fintechs and SCF platforms like Fiducia must continue simplifying onboarding, building trust with SMEs, and designing user-friendly tools that make finance intuitive, fast, and inclusive.
Above all, awareness and education are key. Many SMEs still view finance solely through the lens of traditional loans. Shifting this mindset will require continuous advocacy, training, and demonstration of the benefits SCF offers, especially in times of economic uncertainty.
Creating this kind of ecosystem will take time, coordination, and commitment from all players. But progress is already underway, and platforms like Fiducia are playing their part in laying the foundation for what scalable, inclusive supply chain finance can look like.
The Fiducia Advantage
Fiducia is redefining how African SMEs access working capital, by transforming approved invoices into immediate liquidity at scale. As a digital supply chain finance marketplace, Fiducia connects suppliers, corporate buyers, and multiple financiers in a single, secure ecosystem that facilitates fast, affordable invoice financing.
Through models like factoring and reverse factoring, SMEs can upload approved invoices, which are then matched with competitive bids from a pool of diverse financiers. Once a bid is accepted, funds are disbursed within 48 hours, no collateral, no paperwork-heavy processes. This model empowers SMEs to improve turnover, reduce receivable days, and hedge against exchange rates and inflation risks, while buyers optimize cash flow without burdening their balance sheets.
What sets Fiducia apart is its multi-lender structure and sector-agnostic platform, currently trusted by over 250 businesses. By leveraging verified transactions and buyer credibility, the platform helps to de-risk SME lending and expands access to financing where it’s needed most.
As Nigeria pushes for more inclusive economic growth, Fiducia offers a real, scalable solution. To see how Fiducia is enabling smarter financing for SMEs across Nigeria, visit www.myfiducia.com or request a demo today.
