Challenges in Accessing Entrepreneurial Finance in Nigeria
10.3 Challenges in Accessing Entrepreneurial Finance in Nigeria High-Interest Rates One of the major hurdles that Nigerian entrepreneurs encounter when seeking financing is the high-interest rates set by financial institutions Commercial banks and microfinance institutions often impose elevated interest rates due to the perceived risks involved in lending to small and medium-sized enterprises (SMEs). These steep rates can tender loans unaffordable for many entrepreneurs, hindering their ability to grow or maintain their businesses. The expense of borrowing has a significant effect on profit margins and can deter potential entrepreneurs from pursuing formal financing. This situation is especially problematic in Nigeria, where the business landscape is already marked by by volatility and uncertainty. 2. Collateral Requirements Many formal financial institutions in Nigeria mandate that borrowers provide collateral as a guarantee for loans. This stipulation creates a barri...