World Bank approves $500m to expand MSME financing in Nigeria

The World Bank has approved a $500 million financing package aimed at improving access to finance for micro, small and medium enterprises (MSMEs) in Nigeria under the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project.

In a statement issued on Saturday, December 20, the Bank said the package comprises a $400 million loan from the International Bank for Reconstruction and Development (IBRD) and a $100 million credit from the International Development Association (IDA).

The project will be implemented by the Development Bank of Nigeria (DBN), while credit guarantees will be provided through its subsidiary, Impact Credit Guarantee Limited.

According to the World Bank, MSMEs make up the bulk of businesses in Nigeria, contributing nearly half of the country’s gross domestic product and providing a large share of employment.

However, many of these businesses continue to face major challenges in accessing formal finance.

The Bank noted that fewer than one in 20 MSMEs have access to bank credit, with existing loans often short-term, expensive and tied to collateral requirements that exclude many viable enterprises.

Women-led businesses were highlighted as being particularly affected, facing higher loan rejection rates and limited access to suitable financial products.

Agribusinesses were also identified as struggling to secure long-term financing needed for equipment, processing, storage and logistics, despite their importance to food security and rural livelihoods.

The World Bank explained that FINCLUDE is designed to address these gaps by expanding access to affordable, longer-term financing and tailored financial solutions, especially for women-led enterprises and agribusinesses with high development impact.

Commenting on the approval, the World Bank’s Country Director for Nigeria, Mathew Verghis, said the project focuses on jobs, opportunity and inclusion.

He said the initiative would make it easier for viable small businesses to access finance, grow their operations and create jobs, while supporting lenders that promote inclusive finance and fairer loan terms.

Under the project, the Development Bank of Nigeria will strengthen the capacity of commercial banks, microfinance banks and non-bank financial institutions, including fintech firms, to provide larger loans with longer repayment periods.

Impact Credit Guarantee Limited will expand partial credit guarantees to encourage lenders to finance businesses considered higher risk.

The project will also provide technical assistance to modernise loan appraisal processes using AI-enabled digital platforms, improve data use, strengthen impact measurement and build the capacity of both MSMEs and participating financial institutions.

The FINCLUDE Task Team Leader, Hadija Kamayo, said the project is expected to mobilise about $1.89 billion in private capital and expand debt financing to 250,000 MSMEs, including at least 150,000 women-led businesses and 100,000 agribusinesses.

The approval adds to Nigeria’s growing portfolio of World Bank-supported programmes. As of June 30, 2025, Nigeria’s external debt stood at $46.98 billion, with the World Bank Group remaining the country’s largest single creditor, accounting for $19.39 billion, or 41.3 per cent, of the total external debt.