At the 2024 Finance and Business Online Publishers (FiBOP) Capacity Building Workshop, Victor Kalu, Managing Director and CEO of Zend Technology Company Limited, emphasized the need for financial infrastructure to support the informal sector.
This sector, comprising street traders and other informal players, generates approximately N36 billion in revenue, yet most of it remains outside the traditional banking system.
Kalu stressed that innovation in financial infrastructure is crucial for economic growth, as it facilitates business and provides access to financial services.
He noted that President Bola Ahmed Tinubu recognizes the potential of the informal sector and that financial technology and infrastructure could jumpstart the economy.
Comparing Nigeria to South Africa, Kalu highlighted the significant difference in internally generated revenue. Nigeria’s budget is around $20 billion, with less than half financed internally, whereas South Africa’s budget is $12 billion, with $10 billion generated internally.
Kalu emphasized that capturing the informal sector’s revenue could bring substantial value to the economy.
The lack of access to financial systems is a major obstacle for the informal sector, limiting their growth. Expensive borrowing costs are a significant issue, with some informal sector players borrowing at over 100 percent interest per annum, while big businesses borrow at 20 percent.
Kalu argued that the right infrastructure would enhance risk assessment, enable cheaper credit, and accelerate economic growth.
Kalu tasked financial journalists with bringing attention to the need for financial infrastructure supporting the informal sector.
He emphasized the potential for economic growth, particularly in the oil and gas industry, where challenges with supply could be addressed with the right financial support.
By addressing these challenges and providing the necessary financial infrastructure, Nigeria can unlock the potential of its informal sector and drive economic growth.
Kalu’s call to action underscores the importance of prioritizing financial infrastructure development to maximize the sector’s contribution to the nation’s economy.
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