By Hajara Abdullahi
In a bid to increase access to finance for Micro, Small and Medium Enterprises in Nigeria, the Federal Government of Nigeria is seeking an additional $500m loan from the World Bank for the FINCLUDE project.
The loan is designed for FINCLUDE,Fostering Inclusive Finance for MSMEs in Nigeria. If implemented it will promote Innovation and financial access for small businesses.
According to the World Bank,the loan will help provide seamless capital access through the Development Bank of Nigeria and its subsidiary, Impact Credit Guarantee Limited.
“The proposed FINCLUDE Project leverages the platforms of the Development Bank of Nigeria and its subsidiary, the Impact Credit Guarantee Limited, to drive inclusive MSME finance”
“Through these catalytic institutions, the project will deploy a package of complementary, inclusive, and innovative instruments tailored to the diverse needs of MSMEs in Nigeria” the World Bank stated.
The project is estimated to gulp $2.39bn where the two main lending arms of the World Bank, the International Bank for Reconciliation and Developments as well as the International Development Association will support the project. The World Bank will provide $500m while International Bank for Reconstruction and Development $100m and the International Development Association $100m.
The remaining 1.89 billion will be provided by commercial lenders, the Development Bank of Nigeria which is the implementing agency responsible for managing and distribution of the funds.
The project comprises three components: inclusive and innovative MSME finance products,de risking and mobilizing private capital through partial credits guarantees, and technical assistance for strengthening the MSME finance ecosystem.
The project expected to be approved 18 Dec 2025, would provide technical assistance to strengthen the capacity of financial institutions, modernize and increase finance to MSME by linking lenders to borrowers.
Nigeria’s economy is witnessing ongoing economic reforms under President Tinubu’s administration with the removal of subsidy and unification of exchange rate and the signing of the Nigeria Tax Reform Bills into law, set to be implemented in January 20226. However the World Bank has praised the reforms saying it has increased investors confidence, stabilize the economy, ease inflationmand increase revenue and FX.
The World Bank is Nigeria’s largest creditor with $19.39bn disbursement accounting for 41.3 % of Nigeria’s total external debt. If approved this will be the latest loan Nigeria has collected from the Bretton Wood Institution.