The World Bank has approved $500 million in financing to expand access to credit for micro, small and medium enterprises (MSMEs) in Nigeria, in a major push to address long-standing funding gaps that continue to constrain business growth, job creation, and economic inclusion.
In a press statement issued on Saturday, the World Bank said the financing supports the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project. The programme is structured as a blended facility, comprising $400 million from the International Bank for Reconstruction and Development (IBRD) and $100 million from the International Development Association (IDA).
The project will be implemented by the Development Bank of Nigeria (DBN), while credit guarantees will be delivered through its subsidiary, Impact Credit Guarantee Limited.
Why MSME financing matters
According to the World Bank, MSMEs dominate Nigeria’s business landscape, accounting for nearly half of gross domestic product and providing a significant share of total employment. Despite their economic importance, access to formal credit remains severely limited. Fewer than one in twenty MSMEs are able to secure bank loans, and when financing is available, it is often short-term, expensive, and tied to collateral requirements that exclude many viable enterprises.
The credit gap is particularly acute for women-led businesses, which face higher rejection rates and limited access to tailored financial products. Agribusinesses—critical to food security, rural livelihoods, and value-chain development—also struggle to access longer-tenor financing required for investments in equipment, processing facilities, storage, and logistics.
The World Bank said these financing constraints have held back productivity, limited firm expansion, and slowed job creation, especially in sectors with high employment potential.
Focus on inclusion and longer-term credit
The FINCLUDE project is designed to directly tackle these structural barriers by expanding access to affordable, longer-term financing, with a strong focus on women-led enterprises and agribusinesses.
Through the Development Bank of Nigeria, the programme will strengthen the capacity of participating financial institutions—including commercial banks, microfinance banks, and non-bank financial institutions such as fintech firms—to provide larger loans with more flexible repayment periods.
In addition, Impact Credit Guarantee Limited will scale up partial credit guarantees, encouraging lenders to extend credit to MSMEs that would otherwise be classified as too risky. These guarantees are expected to reduce lenders’ risk exposure while expanding access to finance for underserved businesses.
Beyond funding, the project will also deliver targeted technical assistance. This includes modernising loan appraisal processes through AI-enabled digital platforms, improving the use of data for credit assessment, speeding up loan approvals, and strengthening impact measurement across participating institutions.
What the World Bank is saying
Commenting on the approval, the World Bank’s Country Director for Nigeria, Mathew Verghis, said the project is aimed at unlocking jobs, opportunity, and inclusion across the country.
“FINCLUDE is about jobs, opportunity, and inclusion. By opening finance for viable MSMEs—particularly women-led firms and agribusinesses—Nigeria can accelerate growth and deliver tangible benefits in communities nationwide,” Verghis said.
He added that easing access to finance for deserving small businesses would make it easier for them to invest, grow, and hire workers, while supporting lenders that practice inclusive finance and offer fairer, longer-term loan products.
Mobilising private capital at scale
Beyond direct lending, the World Bank said the FINCLUDE project is expected to have a strong catalytic effect on private capital mobilisation. The programme aims to crowd in approximately $1.89 billion in private sector financing and expand access to debt funding for about 250,000 MSMEs nationwide.
At least 150,000 of the targeted beneficiaries are expected to be women-led businesses, while about 100,000 will be agribusinesses operating across agricultural production, processing, and distribution value chains. The project also plans to issue up to $800 million in credit guarantees, further encouraging financial institutions to lend to MSMEs.
According to Hadija Kamayo, the project’s structure is designed to ensure that increased access to finance translates into real economic outcomes.
She noted that extending the average maturity of MSME loans to about three years would allow businesses to invest in productive assets, expand facilities, and grow their workforce. Over time, this is expected to boost productivity, improve firm survival rates, and support sustainable job creation.
The bigger picture
The FINCLUDE approval adds to Nigeria’s growing portfolio of development finance at a time when the country faces tight fiscal conditions and rising borrowing needs. While the programme increases external debt, analysts note that its focus on private-sector productivity, inclusion, and job creation could yield long-term economic returns if effectively implemented.
As Nigeria seeks to diversify its economy away from oil and build resilience through small business growth, the success of FINCLUDE will likely depend on execution quality, lender participation, and the ability of MSMEs to convert improved access to finance into sustained expansion and employment.
Emmanuel Bassey is a Financial Expert that has worked in the Banking and Finance Industry for over 15+ years across different banks in Nigeria
