The Chartered Institute of Bankers of Nigeria (CIBN) has urged banks to tighten risk management systems and expand SME lending across the country.
CIBN President and Chairman Dele Alabi said banks can lend profitably to small and medium-sized enterprises if they sharpen their approach to assessing and managing credit risk. He spoke on Tuesday at a briefing ahead of the institute’s 19th annual conference
Alabi urged Nigerian banks to “go a little bit down the ladder” and extend more credit to micro, small and medium-sized businesses. He argued that SME lending can support financial inclusion and open new revenue streams for banks.
Alabi also flagged weaknesses within small businesses that complicate bank lending. He cited poor corporate governance, weak accounting systems, unreliable financial records and the absence of audited financial statements. Some SME owners also fail to separate ownership from day-to-day management, he said.These weaknesses make it harder for banks to assess cash flow, repayment capacity and credit risk.
CIBN plans to launch SME forums that will connect banks directly with business owners. The institute will also introduce SME clinics to help entrepreneurs strengthen their financial and management structures.
Alabi said the clinics will help small businesses meet lending requirements. He challenged banks to fix their own systems rather than treat SME lending as inherently risky.”Build a strong risk management culture, build the infrastructure,” Alabi said.
He pointed to microfinance institutions as proof that lenders can serve smaller businesses while managing credit risk effectively.
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What SMEs Need to Fix Before Applying for Loans
CIBN’s position places some responsibility on business owners too.A profitable company can still struggle to secure a bank loan if it cannot prove its financial position.
SME owners seeking formal credit need clear sales records, reliable accounts and evidence of cash flow. They should also separate personal money from business finances.
Banks rely on these records to estimate how much a business can repay and whether its cash flow can support the loan. Without reliable financial information, a viable business can look riskier than it actually is.
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CIBN also plans to build SME hubs across Nigeria. Alabi said the institute will start with Lagos. He said CIBN met Lagos State Governor Babajide Sanwo-Olu and secured space for the first hub.
The institute will use the hubs to bring lenders and small businesses closer together and widen access to financial services.
Better bank risk systems alone will not guarantee SME owners a loan. Businesses still need records that let lenders see their sales, costs, debts and repayment capacity clearly. CIBN’s broader argument is that stronger credit assessment can help banks grow SME lending without ignoring the risks smaller businesses carry.