FG seeks $500m World Bank loan to support MSMEs
The Federal Government has sought a fresh $500 million loan from the World Bank to expand access to finance for micro, small, and medium enterprises (MSMEs) across the country.
The facility, titled Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project, is designed to mobilize private capital and promote innovative financial products for small businesses, according to a World Bank document on the proposed program.
The World Bank said the project would leverage the platforms of the Development Bank of Nigeria (DBN) and its subsidiary, Impact Credit Guarantee Limited (ICGL), to improve credit flow to MSMEs and strengthen the financial ecosystem.
“Through these catalytic institutions, the project will deploy complementary, inclusive, and innovative instruments tailored to the diverse needs of MSMEs in Nigeria,” the World Bank stated.
The total cost of the project is estimated at $2.39 billion, of which the World Bank will finance $500 million.
The loan will comprise $400 million from the International Bank for Reconstruction and Development (IBRD) and $100 million from the International Development Association (IDA), the two main lending arms of the World Bank Group.
The remaining $1.89 billion is expected to come from commercial lenders as unguaranteed financing.
The Federal Government will serve as the borrower, while the Development Bank of Nigeria will act as the implementing agency responsible for managing the funds.
The World Bank described DBN as a trusted partner with a strong track record in executing complex financial inclusion projects.
The project, expected to receive World Bank Board approval on December 18, 2025, will comprise three components:Inclusive and innovative MSME finance products, De-risking and mobilising private capital through partial credit guarantees, and Technical assistance for modernising and digitising MSME financing systems.
Under the first component, the World Bank plans to provide Tier-2 subordinated capital to eligible financial institutions and establish an MSME investment fund to channel equity and long-term debt to small businesses.
The project will also provide technical assistance to strengthen financial institutions, enhance regulatory oversight, and modernise the MSME finance chain linking DBN, lenders, and entrepreneurs.
The World Bank appraisal report highlighted Nigeria’s recent economic reforms, describing the country as being “in a critical transition.” It said that the removal of fuel and foreign exchange subsidies, alongside exchange rate unification, had improved fiscal space, eased inflation to 18 per cent as of September 2025, and restored investor confidence.
Despite these gains, the report noted that access to finance remains uneven particularly for small businesses, women, and agriculture which accounted for just five per cent of total bank credit in 2024.
If approved, FINCLUDE will add to Nigeria’s growing World Bank portfolio. As of June 30, 2025, the country’s external debt stood at $46.98 billion, according to the Debt Management Office (DMO).
The World Bank remains Nigeria’s largest external creditor, holding $19.39 billion or 41.3 per cent of total foreign debt comprising $18.04 billion from IDA and $1.35 billion from IBRD.