By Emmanuel Nduka Obisue
The World Bank has approved a $500 million financing package aimed at widening access to credit for micro, small and medium enterprises (MSMEs) in Nigeria, a sector widely regarded as the engine of the country’s economy but long constrained by limited funding.
The facility, approved on Friday, is being provided under the Fostering Inclusive Finance (FINCLUDE) programme and 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).
According to a statement from the World Bank, the project will be implemented by the Development Bank of Nigeria (DBN), while credit guarantees will be delivered through DBN’s subsidiary, Impact Credit Guarantee Limited (ICGL).
Although MSMEs account for the majority of businesses in Nigeria, contribute nearly half of the country’s gross domestic product, and employ a large share of the workforce, access to formal finance remains severely limited.
The Bank noted that fewer than one in twenty MSMEs can obtain bank credit, with available loans often short-term, expensive, and tied to collateral requirements that many viable businesses cannot meet.
Women-led enterprises are particularly affected, facing higher rejection rates and a lack of financial products tailored to their needs. Agribusinesses, which play a critical role in food security and rural employment, also struggle to secure longer-tenor financing for equipment, processing, storage, and logistics.
The World Bank said FINCLUDE is designed to address these challenges by expanding affordable, longer-term financing and targeted solutions for sectors with high development impact.
“FINCLUDE is about jobs, opportunity, and inclusion,” said Mathew Verghis, World Bank Country Director for Nigeria. “By opening finance for viable MSMEs—especially women-led firms and agribusinesses—Nigeria can accelerate growth and deliver tangible benefits across communities”.
The project is expected to mobilise private investment, expand access to innovative financial products, and strengthen the capacity of banks, microfinance institutions, and financial technology firms to provide larger loans with more flexible repayment periods.
Through ICGL, partial credit guarantees will also be scaled to encourage lenders to support businesses previously considered too risky.
In addition, targeted technical assistance will modernise loan appraisal processes using AI-enabled digital platforms, improve impact measurement, and build capacity for both MSMEs and participating financial institutions.
The World Bank estimates that FINCLUDE could help mobilise about $1.89 billion in private capital, expand debt financing to 250,000 MSMEs, including at least 150,000 women-led businesses and 100,000 agribusinesses, and issue up to $800 million in guarantees.
By extending the average maturity of MSME loans to around three years, the initiative is expected to enable firms to invest in equipment, facilities, staff, and productivity, translating improved access to finance into jobs and economic growth, according to Hadija Kamayo, Task Team Leader for FINCLUDE.
