The World Bank has approved a $500 million financing package to address chronic funding shortages plaguing Nigeria’s micro, small, and medium enterprises (MSMEs), the engine of the country’s economy.
Announced in a press release on Saturday, the funding supports the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project, a blended facility combining $400 million from the International Bank for Reconstruction and Development (IBRD) and $100 million in concessional credit from the International Development Association (IDA).
MSMEs form the backbone of Nigeria’s business landscape, representing the vast majority of enterprises, contributing nearly 50% of gross domestic product, and providing a substantial portion of employment. Yet, formal credit remains elusive: fewer than one in twenty MSMEs secure bank loans, with available financing often short-term, high-cost, and heavily reliant on collateral that excludes many viable businesses.
Register for Tekedia Mini-MBA edition 19 (Feb 9 – May 2, 2026): big discounts for early bird.
Tekedia AI in Business Masterclass opens registrations.
Join Tekedia Capital Syndicate and co-invest in great global startups.
Register for Tekedia AI Lab: From Technical Design to Deployment (next edition begins Jan 24 2026).
Women-led enterprises face heightened barriers, including higher rejection rates and a lack of tailored products, while agribusinesses—vital for food security and rural economies—struggle to obtain longer-term funding for essential investments in equipment, processing, storage, and logistics.
The FINCLUDE project, implemented by the Development Bank of Nigeria (DBN)—a wholesale development finance institution established with prior World Bank support in 2017—and its subsidiary Impact Credit Guarantee Limited (ICGL), aims to bridge these gaps. Through DBN, the initiative will build capacity among commercial banks, microfinance institutions, non-bank lenders, and fintech companies to offer larger loans with extended, more flexible repayment terms. ICGL will expand partial credit guarantees, covering up to 60% of loan risk in some cases, to de-risk lending to high-potential but traditionally underserved borrowers.
A key innovation includes targeted technical assistance to digitize and modernize loan processes. Participating institutions will adopt AI-enabled platforms to enhance credit appraisal, improve data analytics, accelerate decisions, and strengthen impact tracking. World Bank Country Director for Nigeria, Mathew Verghis, who assumed the role in July 2025, emphasized the project’s focus on inclusive growth.
“FINCLUDE is about jobs, opportunity, and inclusion,” Verghis said. “By opening finance for viable MSMEs—particularly women-led firms and agribusinesses—Nigeria can accelerate growth and deliver tangible benefits in communities nationwide. 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 practice 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.”
Hadija Kamayo, Task Team Leader for FINCLUDE and a World Bank financial sector specialist, highlighted the leverage potential.
“FINCLUDE will help mobilize approximately $1.89 billion in private capital, expand debt financing to about 250,000 MSMEs—including at least 150,000 women-led businesses and 100,000 agribusinesses—and issue up to $800 million in credit guarantees to catalyse additional lending,” she said.
By extending average loan maturities to around three years, she added, businesses can invest in productive assets, driving productivity gains, workforce expansion, and sustained job creation. This approval builds on earlier World Bank efforts, including a 2014 $500 million initiative that helped establish DBN and mobilize over $1.3 billion in commitments. ICGL, launched in 2020, has already supported thousands of MSMEs through risk-sharing mechanisms.
The new project aligns with Nigeria’s broader economic reforms amid challenges like inflation, currency pressures, and debt management. Nigeria’s external debt reached $46.98 billion as of mid-2025, with the World Bank as its largest creditor.
Analysts view FINCLUDE as a timely intervention in a sector where unmet MSME financing needs remain vast, estimated in billions regionally. The project is expected to catalyze broader economic resilience, particularly in rural and women-driven segments critical to poverty reduction and shared prosperity by prioritizing inclusion and private sector mobilization. Implementation details, including rollout timelines, are expected in the coming months as DBN ramps up partnerships with financial institutions nationwide.