Evaluating the Trade Finance Gap and Its Impact on SME Participation in Nigeria’s Export Economy

This study evaluates the nature and extent of the trade finance gap affecting small and medium enterprises in Nigeria and examines its consequences for SME participation in the country's export economy. The International Chamber of Commerce and the African Development Bank have documented a significant trade finance deficit across Sub-Saharan Africa, with Nigerian SMEs disproportionately affected due to stringent collateral requirements, inadequate credit histories, and limited familiarity with trade finance instruments. The research employs a mixed-methods design combining a survey of 80 export-oriented SMEs across four geopolitical zones with structured interviews with trade finance officers from 10 commercial banks and the Nigerian Export-Import Bank. Descriptive statistics, regression analysis, and thematic analysis are used as analytical tools. The theoretical framework draws on financial intermediation theory and the export development process model. The study quantifies the trade finance gap experienced by sampled SMEs, identifies the product types most frequently denied including letters of credit and export credit insurance, and analyses the relationship between trade finance access and export performance metrics including frequency of export transactions, destination market diversity, and export revenue growth. Findings are expected to confirm that restricted trade finance access is a principal constraint on SME export growth, particularly for firms targeting non-ECOWAS markets requiring more complex documentary credit instruments. Recommendations include development of a de-risked trade finance guarantee fund, simplification of SME trade finance application processes, and expansion of fintech-enabled trade finance platforms. Keywords: trade finance gap, SMEs, export, Nigeria, financial access