Payment uncertainty is raising the cost of international trade for Nigerian businesses — Kelvin Obasuyi

Payment uncertainty is contributing to higher costs for Nigerian businesses engaged in international trade, according to fintech expert Kelvin Efosa Obasuyi. Obasuyi, founder and CEO of Vector Innovation and co-founder of financing company 56 Capital, advocates for greater focus on payment infrastructure in discussions around SME financing.

He explains that while a business might have sufficient funds to complete a transaction, it may not be able to deploy those funds when needed. For instance, an importer might have paid for inventory but the supplier is still waiting for cleared funds before releasing the goods. Similarly, an exporter might have completed an order but still be unable to use the proceeds to finance the next production cycle.

Businesses operating in multiple currencies can also face challenges, holding balances in one account while facing obligations in another.

These situations can pressure a company's working capital. For businesses with limited reserves, this might lead to additional borrowing, delayed purchases or declining orders. Obasuyi's insights stem from his experience assessing businesses seeking finance, working on financial technology products, and building cross-border payments and treasury infrastructure.

Obasuyi emphasizes that financing needs are determined not just by the transfer fee or exchange rate, but also by the timing of payment, delivery, sale and collection. The longer these processes take, the more the financing requirement increases, even if the underlying order is profitable. As such, payment delays can increase financing needs beyond the transfer fee or exchange rate.

However, Obasuyi notes that not every delayed payment results in a loan. The impact depends on the company's cash position, contractual terms and operating model. Nevertheless, businesses with little financial flexibility have fewer options when expected settlements do not arrive.

Obasuyi's perspective was shaped during his early work at Vector, where he discovered that customers valued dependable settlement, transparency, and responsiveness in addition to cost. He believes payment providers should understand the commercial purpose of a transaction and provide customers with the information needed to plan around it.

This applies to businesses on both sides of an international trade relationship. A British supplier selling to a Nigerian distributor needs to know when to release inventory, schedule production or extend payment terms. The Nigerian buyer must also understand funding requirements, currency conversion, and settlement timing before committing to its own customers.

Uncertainty in these areas can influence trade terms. A supplier concerned about payment timing might request funds earlier, while a buyer with additional reserves could initiate transfers further in advance. These arrangements can protect individual parties while also increasing the capital committed to the relationship.

Obasuyi stresses that cross-border payment performance is relevant to British exporters, African importers, and the financial institutions supporting them. The goal is to give each participant a clearer basis for fulfilling their obligations. This international perspective informs his approach to developing Vector from the UK, requiring an understanding of both the operating requirements of businesses trading across African and international markets and the expectations of banking, payment, and liquidity partners.