The World Bank Group is expected to approve a new $500 million loan for Nigeria in furtherance of its efforts to broaden funding access for micro, small and medium enterprises (MSMEs) in the country.
The proposed facility, titled “Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project” with an estimated total cost of $2.39 billion, is packaged to mobilise private capital and promote innovative financial products for the nation’s MSMEs.
According to information obtained from the development finance institution’s information channel, negotiations on the facility have commenced and the approval is expected to be granted today.
From the World Bank facility, $400 million will be provided by the International Bank for Reconstruction and Development (IBRD), while $100 million will be sourced from the International Development Association (IDA), and the balance of $1.89 billion for the project’s implementation is expected to be provided by commercial lenders as unguaranteed financing.
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Under the terms of the deal, the Federal Government will be the borrower with the Development Bank of Nigeria (DBN) serving as the implementing agency with overall responsibility for managing the funds.
According to the multilateral development finance institution, the FINCLUDE project will leverage the platforms of the Development Bank of Nigeria and its subsidiary, Impact Credit Guarantee Limited, to deepen credit access for MSMEs.
The World Bank further clarified: “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”, it added.
Describing DBN as “a partner well known to the World Bank with high implementation capacity and a proven track record in designing and executing complex, innovative projects”, the World Bank maintained that the bank’s role would be cruciaal to the success of the intervention.
The World Bank’s document on the project reflected it was structured around three main components, namely provision of inclusive and innovative MSME finance products, de-risking and mobilisation of private capital through partial credit guarantees, and technical assistance aimed at modernising and digitising Nigeria’s MSME finance ecosystem.
Under the first component, the World Bank disclosed the project would provide Tier 2 subordinated capital to eligible financial institutions and support the establishment of an MSME investment fund to deliver equity and long-term debt financing to small businesses, adding that this approach will help “crowd-in private capital, test market innovations and promote financial sustainability” within the MSME subsector of the nation’s economy.
Similarly, it stated that the project would offer targeted technical assistance to strengthen the capacity of financial institutions, improve regulatory oversight and modernise the MSME finance value chain linking DBN, lenders and entrepreneurs.
In its appraisal report, the Washington D.C-based multilateral development institution acknowledged Nigeria’s ongoing economic reforms, describing the country as being in a critical transition.
It noted that the removal of fuel and foreign exchange subsidies as well as the unification of exchange rates, had begun to stabilise the economy and restore investor confidence.
The appraisal report confirmed that the Federal Government’s ongoing reforms had improved fiscal space, enhanced FX liquidity, and eased inflation to 18 per cent as of September 2025.
