The Federal Government of Nigeria has formally requested a $500 million loan from the World Bank to improve financing for micro, small, and medium enterprises (MSMEs) across the country. The proposed initiative, named the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project, is designed to attract private capital and introduce innovative financial products tailored to small businesses.
According to a World Bank project document, the funding will be channelled through the Development Bank of Nigeria (DBN) and its subsidiary, Impact Credit Guarantee Limited, to deepen credit access for MSMEs. “Through these catalytic institutions, the project will deploy a package of complementary, inclusive, and innovative instruments tailored to the diverse needs of MSMEs in Nigeria,” the World Bank stated.
The total cost of the FINCLUDE Project is estimated at $2.39 billion, with $500 million expected from the World Bank—$400 million via the International Bank for Reconstruction and Development (IBRD) and $100 million from the International Development Association (IDA). The remaining $1.89 billion will be sourced from commercial lenders, with the Federal Government as the borrower and the DBN as the implementing agency overseeing fund management.
The project comprises three main components: innovative MSME finance products, de-risking and mobilizing private capital through partial credit guarantees, and technical assistance for modernizing and digitizing the MSME finance ecosystem. It is expected to provide Tier 2 capital to financial institutions, establish an MSME investment fund, and offer technical support to strengthen regulatory oversight and enhance the capacity of banks serving small businesses.
The World Bank highlighted Nigeria’s ongoing economic reforms, including subsidy removal and exchange rate unification, which have begun to stabilize the economy. Despite these efforts, access to finance remains uneven, particularly for small businesses, women, and agriculture. If approved, FINCLUDE will reinforce the World Bank’s dominant role in financing Nigeria’s development, as it currently accounts for 41.3% of the country’s external debt, underscoring its long-term commitment to supporting the nation’s economic growth.
source: punch