The Opportunity

Small and Medium Scale Enterprises (SMEs) are typically defined as companies with revenues less than US$15 million per annum, total assets less than US$15 million or number of staff less than 250 people[1]. In market driven economies, SMEs play a crucial role as they typically account for a larger share of employment and GDP growth than large corporates. This is especially the case in the frontier and emerging markets of Sub-Saharan Africa(SSA). For example, Nigeria where 96% of businesses are SMEs according to the Central Bank of Nigeria (CBN).

SMEs in the SSA region have noticeably underperformed due to several key issues. This underperformance continues to severely constrain Nigeria’s economic growth and development. These key issues include poor governance, inadequate infrastructure, human capital constraints (e.g. low managerial and technical skills), historically low levels of regulatory ESG enforcement, etc.

However, the most pertinent issue identified is the lack of adequate and appropriate funding for these businesses – i.e. the funding gap. This funding gap presents a significant opportunity for investors who understand the local environment and possess the relationships to structure transactions that address the needs of SMEs. MBO Capital’s primary focus is to provide viable financing options for SMEs. Our success in helping companies hinges not only on our ability to provide the appropriate capital required, but also the business support that is necessary to tackle some of the other key issues.

[1] As defined by the Central Bank of Nigeria – April 5, 2017