FG plans $500m W/Bank loan for MSMEs
Agency Report
The Federal Government of Nigeria has initiated plans to secure a fresh $500 million loan from the World Bank aimed at expanding access to finance for micro, small, and medium enterprises, MSMEs, nationwide.
The new facility, officially titled Fostering Inclusive Finance for MSMEs in Nigeria, FINCLUDE, Project, is designed to stimulate private investment and introduce innovative financial solutions for small businesses.
According to project details obtained from the World Bank, the loan will be channelled through the Development Bank of Nigeria, DBN, and its subsidiary, Impact Credit Guarantee Limited, ICGL, to strengthen MSME credit access and financial inclusion.
“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,” the World Bank stated.
“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 total value of the FINCLUDE initiative is projected at $2.39 billion, of which the World Bank will contribute $500 million. The funding will comprise $400 million from the International Bank for Reconstruction and Development, IBRD, and $100 million from the International Development Association, IDA —the two principal lending arms of the World Bank Group.
While the IBRD provides loans on near-commercial terms to middle-income and creditworthy low-income nations, the IDA focuses on the poorest countries through concessional financing and grants funded by donor contributions.
The balance of $1.89 billion will come from private commercial lenders as unguaranteed financing. Under the arrangement, the Federal Government will serve as the borrower, with the DBN acting as the implementing agency responsible for managing and disbursing funds.
The World Bank praised the DBN, noting that “DBN is a partner well known to the World Bank with high implementation capacity and a proven track record in designing and executing complex, innovative projects.”
Expected for approval on December 18, the project is structured around three main components: inclusive and innovative MSME finance products, de-risking and mobilising private capital through partial credit guarantees, and technical assistance for modernising and digitising the MSME finance ecosystem.
For the first component, the World Bank explained that the project would provide Tier 2 subordinated capital to qualified financial institutions and help establish an MSME investment fund to offer equity and long-term debt financing for small businesses.
It added that the initiative aims to attract private investment, test new market solutions, and enhance financial sustainability within Nigeria’s small business environment.
In addition, the project will deliver targeted technical assistance to boost the capacity of lenders, improve regulatory oversight, and modernise the MSME finance chain connecting DBN, financial institutions, and entrepreneurs.
The World Bank’s appraisal report described Nigeria’s economy as being in a critical phase of reform, noting that the elimination of fuel and foreign exchange subsidies and the unification of exchange rates have contributed to stabilising macroeconomic indicators and rebuilding investor confidence.
The report added, “These reforms have improved fiscal space, enhanced FX liquidity, and eased inflation to 18 per cent as of September 2025. Growth prospects are strengthening, with the IMF projecting 3.9 per cent real GDP growth in 2025.”
Nonetheless, access to finance remains uneven across the economy, especially among small businesses, women entrepreneurs, and agricultural enterprises. The World Bank highlighted that agriculture represented just over five per cent of total bank credit in 2024, with high interest rates and limited credit penetration continuing to stifle small-scale lending.
Once approved, FINCLUDE will become the latest in a succession of World Bank-supported facilities for Nigeria. As of June 30, 2025, Nigeria’s total external debt stood at $46.98 billion, according to the Debt Management Office, DMO.
