W’Bank provides $1.4bn in funding to boost Nigerian MSMEs

In a report released by the World Bank on Friday, a total of 321,867 Micro, Medium, and Small Enterprises (MSMEs) in Nigeria have received wholesale funding amounting to $1.4 billion over the course of six years.

The funds were disbursed through the Development Bank of Nigeria and were aimed at providing long-term loans and risk-sharing facilities to small businesses.

The report highlighted that 66 percent of the beneficiaries were women-owned enterprises, while 12 percent were first-time borrowers. The World Bank emphasized that access to finance continues to be a significant and persistent challenge for MSMEs in Nigeria.

It stated, “Access to finance is a major, long-standing obstacle faced by micro, small, and medium enterprises in Nigeria. In 2014, only 6.7 percent of enterprises reported having a loan or active line of credit.

“MSME loans averaged about five per cent of total commercial bank lending by volume and were equivalent to only two per cent of banking-sector assets. Even today, the private credit-to-GDP ratio remains low and concentrated in the oil and gas sector and large, ‘blue-chip’ conglomerates. Although MSMEs are the backbone of the Nigerian economy, limited access to finance severely constrained their growth.”

This challenge made the finance ministry request World Bank support in launching the Nigeria Development Finance Projects with a $500m loan support.

It stated, “The DBN has earned a reputation for being even-handed, highly responsive, and innovative among its 28 Partner financial institutions. Key project achievements include a wholesale funding to PFIs amounting to the naira equivalent of $1.4billion, on-lending to 321,867 MSMEs, of which 66 percent are women-owned, and 12 percent are first-time borrowers.

The banks also supported over 28,000 MSMEs with guarantees equivalent to $195 million through its wholly-owned subsidiary, Impact Credit Guarantee Limited, established in 2020.”