The Federal Government is seeking a new $500m loan from the World Bank Group to improve funding for micro, small, and medium enterprises (MSMEs) in the country.
A project document sourced from the World Bank Group indicated that the proposed loan titled ‘Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project’ is intended to further mobilise private capital and promote innovative financial products and deepen credit access through the Development Bank of Nigeria (DBN) and its subsidiary, Impact Credit Guarantee Limited (ICGL) for MSMEs.
According to the document, “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 added.
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The World Bank’s document estimated that the total cost of the project would be $2.39 billion, from which $500 million will be financed by the multilateral finance institution while the International Bank for Reconstruction and Development (IBRD) will provide $400 million, and the International Development Association (IDA) will support the project with $100 million.
The project document further reflected that the balance of $1.89 billion would be sourced from commercial banks as unguaranteed financing, with the Nigerian government being the borrower while the Development Bank of Nigeria (DBN) will act as the implementing agency with overall responsibility for managing the funds.
The document also revealed that the project, which is expected to be approved on December 18, 2025, comprises three components, namely 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.
Under the first component, the World Bank clarified the project would provide Tier 2 subordinated capital to eligible financial institutions and support the establishment of an MSME investment fund to provide equity and long-term debt to small businesses.
The Washington D.C-based bank maintained the initiative would help crowd-in private capital, test market innovations and promote financial sustainability in Nigeria’s small business sector as well as provide targeted technical assistance to strengthen the capacity of financial institutions, improve regulatory oversight, and enhance the MSME finance chain linking DBN, lenders, and entrepreneurs.
The World Bank Group’s appraisal report on the project highlighted Nigeria’s ongoing economic reforms, describing the country as being in a critical transition.
It, however, noted that the removal of fuel and foreign exchange subsidies and the unification of foreign exchange rates in the official and parallel markets had helped in stabilizing the FX rates and restoring investor confidence in the nation’s economy.
Specifically, the World Bank Group stated: “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.”
