Lending to Nigeria’s SMEs is hard. Nomba thinks there’s a better way

Nomba has announced the results of an 18-month partnership with Globus Bank that saw it issue ₦21.3 billion in loans to businesses across wholesale and retail, professional services, food and hospitality, oil and gas, and FMCG.

According to the fintech, the partnership saw its non-performing loan ratio remain below 1%, a result it says strengthens its case for lending to businesses in Nigeria.

“The Nigerian credit conversation has been captured by one question: how much have you deployed? That is the wrong question. The right question is how much has come back and why,” Yinka Adewale, Nomba CEO, shares.

Credit to businesses is widely accepted as critical for boosting productivity and driving growth. But for Nigerian small and medium businesses, access to credit remains limited. While banks are expected to extend loans to businesses, the vast majority remain cautious, as the absence of consequences for defaulters makes debt recovery particularly tedious.

Nomba says its approach offers a more efficient way to not only determine who gets a loan but also to recover it. Traditionally, banks require extensive financial documentation and physical collateral — barriers that many small and medium-sized businesses struggle to meet, effectively locking them out of credit.

Nomba takes a different approach. Instead of relying on audited statements and historical financials, it evaluates businesses based on real-time payment flows processed on its platform — data it already has direct visibility into.

On the collateral side, the requirements are more flexible. Businesses can either commit 30% of the requested loan amount in cash or provide alternative assets such as stocks, stablecoins, equity stakes, or even physical assets like vehicles.

Still, Nomba appears to be taking a measured approach to lending. According to Adewale, the ideal loan recipient is a business generating around $1 million in annual revenue or one with a clear path to reaching that scale. Loan sizes are also deliberately conservative, with the average disbursement roughly 1% of a business’s annual revenue.

For its next phase, the startup says it aims to grow its loan book to $500 billion by partnering with institutional credit providers, including commercial banks and development finance institutions. The expansion will prioritise high-impact sectors such as logistics, manufacturing, and healthcare.

While these numbers are impressive, the real test will come as the startup scales its loan book — a reality that is already shaping its growth strategy.

“Lending isn’t something we believe needs to be scaled aggressively. We will always take a conservative approach. We bank over 600,000 businesses today in Nigeria; our credit model is capped at 20,000 businesses, as those are the businesses we believe have enough corporate structure to understand debt and also provide some form of security to back the loans,” Adewale shares.

Nomba’s early results suggest that tighter underwriting and real-time visibility into cash flows can improve repayment outcomes, at least within a controlled borrower base. But in Nigeria, loan disbursement is rarely the problem; recovery is.

Consequently, the durability of this model will be tested over time as the loan book grows, as credit performance often falters during recovery, where weak enforcement and limited consequences for default can erode lender returns.