The World Bank has approved a $500 million financing package to support Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. The package, which is part of the Fostering Inclusive Finance (FINCLUDE) project, consists of a $400 million International Bank for Reconstruction and Development (IBRD) loan and a $100 million International Development Association (IDA) credit.
Nigeria’s MSMEs play a vital role in the country’s economy, accounting for the majority of businesses, nearly half of the GDP, and a significant portion of jobs. However, they face significant barriers to accessing formal finance, with fewer than one in twenty MSMEs having access to bank credit. Loans are often short-term and costly, and collateral requirements exclude many viable firms. Women-led enterprises and agribusinesses are disproportionately affected, facing higher rejection rates and limited access to tailored products.
The FINCLUDE project aims to address these constraints by expanding affordable, longer-term finance and tailored solutions to segments with the greatest development impact. The project will be implemented by the Development Bank of Nigeria (DBN), with credit guarantees delivered through DBN’s subsidiary, Impact Credit Guarantee Limited (ICGL). The project will help to mobilize private investment and expand access to and usage of inclusive, innovative financial products for MSMEs nationwide.
Through the project, the World Bank hopes to make it easier for deserving small businesses to access the finance they need to grow and hire workers. The project will also provide targeted technical assistance to modernize loan appraisal and strengthen the capacity of banks and non-bank financial institutions to provide larger loans with more reasonable repayment periods.
The project is expected to have a significant impact, mobilizing approximately $1.89 billion in private capital, expanding debt financing to 250,000 MSMEs, and issuing up to $800 million in guarantees to catalyze lending. By extending the average maturity of MSME loans to about three years, the project will help firms invest in equipment, factories, staff, and productivity, translating finance into jobs and growth.
The World Bank’s Country Director for Nigeria, Mathew Verghis, emphasized the importance of the project, stating that it is about jobs, opportunity, and inclusion. He noted that by opening up finance for viable MSMEs, particularly women-led firms and agribusinesses, Nigeria can accelerate growth and deliver tangible benefits in communities nationwide.
