Traction raises $6mln in seed funding to empower SMEs in Nigeria
By Kingsley Odii
Accessing formal financing has long been a daunting task for SMEs in Nigeria. With over 41.5 million Small and Medium-sized Enterprises (SMEs) in the country, a staggering 95% of them lack access to formal financing. Moreover, less than 1% of the total banking credit is allocated to small businesses, as Nigerian banks often subject them to a time-consuming due diligence process and stringent conditions.
Traction, a Nigerian-based merchant solution platform, has recently raised $6 million with the intent to addressing these challenges and empower small businesses.
In a recent seed funding round, Traction successfully raised $6 million, geared towards bolstering the efficiency of SMEs in Nigeria. The round was led by Multiple partners and Ventures Platform, with participation from P1 Ventures and other investors. The infusion of capital will be utilized to drive expansion, accelerate the company’s growth, and bolster its team.
Recognizing the pressing need for accessible financial options, Traction is committed to bridging the gap faced by small businesses in Nigeria. The platform aims to provide innovative solutions that alleviates the burdens associated with securing loans and accessing formal financing.
Dotun Olowoporoku, General partner of Venture platform, said in a statement: “Traction stands out as more than a payment processor. It is an indispensable growth partner for Nigerian’s SMES. The company’s industry-specific software, including its financial services marketplace, offers relevant business solutions, affordable capital, and insurance.
“We are excited about the team’s ability to continue delivering product innovations and Traction’s potential to unlock immense value for SMEs, which are the bedrock of Africa’s economy.”
The financing landscape for SMEs in Nigeria has been fraught with obstacles. Traditional banking institutions typically undertake extensive due diligence procedures, leading to prolonged loan application processes. Further, stringent conditions imposed by banks have made it increasingly difficult for small businesses to obtain the necessary funding to grow and thrive.
Traction, however, is determined to change this narrative. The Nigerian-based merchant solution platform has identified the challenges faced by SMEs and is committed to empowering them with the tools and resources needed to succeed. By offering accessible financing options and streamlined processes, Traction aims to level the playing field for SMEs.
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