The World Bank has approved a $500 million financing package to expand access to finance for micro, small and medium enterprises (MSMEs) in Nigeria, as part of efforts to strengthen small business growth in Africa’s most populous economy.
The funding, approved on Friday under the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project, includes a $400 million loan from the International Bank for Reconstruction and Development and a $100 million credit from the International Development Association. Implementation will be led by the Development Bank of Nigeria, with credit guarantees provided through its subsidiary, Impact Credit Guarantee Limited.
According to the World Bank, FINCLUDE is aimed at unlocking finance for viable MSMEs, with a strong focus on women-led businesses and agribusinesses. Nigeria’s MSMEs account for about 90 per cent of businesses and nearly half of GDP, yet fewer than one in 20 have access to bank credit due to short loan tenors, high costs and strict collateral requirements.
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The project is expected to mobilise about $1.89 billion in private capital, expand debt financing to 250,000 MSMEs and issue up to $800 million in guarantees to encourage lending. Of the targeted beneficiaries, at least 150,000 are women-led enterprises, while 100,000 are agribusinesses critical to food security and rural livelihoods.
The World Bank said FINCLUDE will extend the average maturity of MSME loans to about three years, enabling small businesses to invest in equipment, staff and productivity. The project will also strengthen banks, microfinance institutions and fintechs through technical assistance, digital loan appraisal tools and partial credit guarantees, ensuring more inclusive and sustainable financing for Nigerian SMEs.
