The challenges of SMEs in Nigeria and how it can be solved with an onchain solution.

I recently had a conversation with my friend, Blessing, a stay-at-home mom in Nigeria, juggling family life and a small business. She sells hand-made liquid soaps and germicides from her home, and while her products are good, she faces a huge challenge: scaling her business. Like many small business owners in Nigeria, Blessing dreams of expanding her customer base and increasing her stock, but her growth path seems to have a lot of obstacles.

One of the biggest hurdles for Blessing is access to finance. During our conversation, she recounted how she has approached traditional lenders, only to be met with complicated paperwork and rejection because she doesn't have the required collateral. She then turned to loan sharks, who offered her money—but at ridiculously high interest rates. These loans come with unrealistic repayment terms, and a lack of transparency leaving her with little to no profit after payments.

Blessing’s story is not unique. Thousands of small business owners in Nigeria face similar struggles. These businesses are the backbone of the Nigerian economy, but they lack the financial support needed to grow. Most SMEs either can’t access loans, or when they do, the cost is so high that it cripples their ability to expand.

For many business owners like Blessing, the challenges are clear:

1. Ridiculous Loan Requirements: Traditional banks ask for collateral, and for someone running a small business from home, providing assets worth millions is nearly impossible.

2. Complex Documentation: The paperwork needed to secure a loan is overwhelming. Many small business owners don’t have the resources to navigate the complicated process.

3. High Interest Rates: Loan sharks and even some formal institutions charge interest rates so high that paying back becomes a burden rather than a step towards business growth.

In a world that is becoming increasingly digital, an innovative solution to these challenges lies in building onchain. Building onchain is a decentralized and secure way of handling transactions, and it has the potential to transform how SMEs access to finance.

Here’s how an onchain microloan system could help Blessing and many other small business owners:

1. No Collateral Required: Onchain based loans could be given based on a business’s reputation and transaction history rather than requiring physical collateral. This means Blessing wouldn’t need to put up her family home to get a loan.

2. Fast, Transparent Processes: Unlike traditional banks, building onchain eliminates the need for excessive paperwork. All transactions are transparent and verifiable on the blockchain, meaning less stress for business owners trying to secure funding.

3. Lower Interest Rates: Because blockchain cuts out the middleman, the cost of securing a loan can be significantly reduced. This would allow Blessing to access the funds she needs without being buried under debt from high interest rates.

4. Global Access to Investors: With blockchain, Blessing isn’t limited to local banks or lenders. She could access a global pool of investors willing to lend small amounts of money, helping her business grow without the heavy burden of traditional loan systems.

Blessing’s story is an example of what many Nigerian entrepreneurs experience daily. Yet, there is hope. By embracing onchain solutions, small businesses can break free from the old financial systems that hold them back. Blockchain technology offers transparency, fairness, and most importantly, access to funding that doesn’t come with impossible strings attached.

The future of small businesses in Nigeria lies in innovative financial solutions that leverage blockchain technology. For business owners like Blessing, it means that one day, they won’t have to choose between providing for their families and growing their businesses. Instead, they can do both, successfully.

By building onchain based solutions, we can empower SMEs in Nigeria to achieve their potential, one loan at a time.