As of 2021, Nigeria boasts of up to 41.5 million MSMEs with a 50% contribution to the country’s GDP, while offering over 50 million jobs.
The role of MSMEs in developing countries can’t get overemphasized enough, owing to the significant workforce that they produce.
For MSMEs to keep offering value to a nation’s economy, there is a need for access to financial services including loans from banks, investments and insurance.
MSMEs down to the last mile retailers find it challenging to access some of these facilities from the financial institutions.
For instance, how would a traditional bank determine an accurate credit score for an unknown retailer in a remote Nigerian village?
Traditional banks would prefer to give big loans to the big enterprises and shun the MSMEs/SMEs whose contribution to the GDP is massive. This of course is a challenge, thus the power of innovation has to come to play to change this narrative.
Innovation will continue to make the world go round, as every aspect of our lives gets affected by the advent of new technology.
Innovation also shapes the state of the economy and most significantly has disrupted the financial sector.
What traditional banks have failed to offer, fintech has leveraged technology to proffer innovative solutions in deploying financial tools and services.
Taking innovation a step further, technology has now helped to integrate financial services into a non-financial enterprise.
This technology enables businesses to offer services including banking, lending, payments and investment.
This technology, called “Embedded Finance”, is set to deepen the state of financial inclusion for developing countries as its incorporation into non-financial platforms is on the rise.
Reports indicate that by 2025, embedded finance is set to create $230 billion in income from diverse financial services.
Nigerian API fintech company, OnePipe is championing a course for embedded finance to ensure that financial inclusion cuts across the whole country and beyond.
Is Nigeria set to be part of this global income, thus adding up to the country’s GDP? Let’s see how OnePipe is ensuring this.
Payment
Access and seamless payment is a key to financial inclusion, and a leading platform in Opay is offering the service. You can imagine how many Nigerians have leveraged this means to make payments on the go. That is the power of embedded finance.
Lending
Unlike the traditional banks, embedded finance has made lending easy, without having to go through the rigorous process banks will subject you to. With an accurate credit score, your loan application gets processed within minutes. Migo for instance is offering this service.
Banking
Banks need to be at par with neo/challenger companies in order to remain in the game, as embedded finance would be a key focus of their future product development. FCMB, Polaris and Fidelity aren’t far from this as they have built some products on OnePipe to offer financial services.
Summarily, embedded finance will open up a new type of financial services ecosystem, that allows all to be financially included.
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