World Bank Backs Nigerian MSMEs With $500m FINCLUDE Financing

Nigeria’s push to widen access to credit for small businesses has received a major boost following the World Bank’s approval of a $500 million financing package targeted at micro, small and medium enterprises (MSMEs).

The funding, cleared under the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project, combines 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 facility is being extended to the Federal Republic of Nigeria to help address long-standing gaps in access to affordable business finance.

According to a statement issued by the World Bank in Nigeria on Saturday, the programme will be implemented through the Development Bank of Nigeria (DBN), while credit guarantees will be provided by its subsidiary, Impact Credit Guarantee Limited.

Nigeria’s MSMEs dominate the country’s business landscape, contribute close to half of national output and provide a significant share of employment. Despite their importance, access to formal credit remains limited.

The World Bank noted that fewer than five per cent of MSMEs are able to obtain bank loans, and those that do often face high interest rates, short repayment periods and strict collateral requirements.

Women-led enterprises and agribusinesses were identified as some of the most affected. The lender said women-owned firms face higher rejection rates and limited access to products designed for their needs, while agribusinesses struggle to secure longer-term financing for processing, storage, logistics and equipment.

FINCLUDE is structured to respond to these challenges by expanding the availability of longer-tenor, affordable loans and by supporting financial products tailored to high-impact sectors, particularly women-led businesses and agriculture.

Commenting on the approval, World Bank Country Director for Nigeria, Mathew Verghis, said the initiative was centred on economic inclusion and employment creation.

“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 the project would lower barriers for deserving businesses seeking capital to expand operations and employ more workers.

“The project will make it easier for deserving small businesses to get the finance they need to grow and hire workers. With better support for lenders that practise inclusive finance and fairer, longer-term loans for entrepreneurs, we are backing the people who power Nigeria’s economy, especially women and those in agriculture,” he said.

Under the arrangement, the World Bank said DBN would strengthen the capacity of commercial banks, microfinance banks and non-bank financial institutions, including financial technology firms, to issue larger loans with more flexible repayment terms.

Impact Credit Guarantee Limited will scale up partial credit guarantees, reducing lender risk and encouraging financing for businesses that might otherwise be considered too risky.

The project also includes technical assistance aimed at modernising loan appraisal systems through AI-enabled digital platforms.

This is expected to speed up credit decisions, improve data usage, enhance impact measurement and build capacity across both MSMEs and participating financial institutions. Inclusion, the bank stressed, remains a central focus of the programme.

Task Team Leader for FINCLUDE, Hadija Kamayo, said the initiative is expected to crowd in significant private sector funding.

“FINCLUDE will help to mobilise approximately $1.89bn 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 $800m in guarantees to catalyse lending.

By extending the average maturity of MSME loans to about three years, it will help firms invest in equipment, factories, staff, and productivity, translating finance into jobs and growth,” Kamayo said.

The approval comes amid Nigeria’s expanding portfolio of World Bank-supported programmes. Data from the Debt Management Office show that as of June 30, 2025, Nigeria’s external debt stood at $46.98 billion, with the World Bank Group accounting for $19.39 billion, or about 41.3 per cent, of the total.

The latest financing underscores the World Bank’s continued role as Nigeria’s largest single external creditor and a key partner in efforts to strengthen inclusive economic growth.