In a major move to support Nigeria's economic backbone, the World Bank has given its approval for a substantial financial package worth $500 million. The announcement was made on Saturday, December 22, 2025, with the funds specifically earmarked to improve access to formal credit for micro, small, and medium enterprises (MSMEs) across the nation.
Breaking Down the $500 Million Finance Package
The comprehensive funding package is a blend of two sources. A $400 million loan comes from the International Bank for Reconstruction and Development (IBRD), while a $100 million credit is provided by the International Development Association (IDA). This initiative has been named the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) project.
Responsibility for implementing FINCLUDE falls to the Development Bank of Nigeria (DBN). The DBN will utilize its subsidiary, Impact Credit Guarantee Limited, to deliver the crucial credit guarantees needed to de-risk lending to smaller businesses.
Addressing a Critical Finance Gap
The World Bank highlighted the severe challenges facing Nigeria's MSME sector. Despite constituting the majority of businesses in the country and contributing nearly 50% of the national GDP, access to formal bank credit remains extremely limited. The global lender pointed out that fewer than 5% of MSMEs can secure bank loans.
Existing credit options are often problematic: they are short-term, carry high costs, and demand collateral that many viable firms cannot provide. This finance gap hits certain groups hardest:
- Women-led enterprises, which form a large part of the MSME landscape, face higher loan rejection rates and a lack of tailored financial products.
- Agribusinesses, vital for food security and rural employment, struggle to obtain longer-term financing for essential needs like equipment, storage, and logistics.
The FINCLUDE project is designed to directly tackle these issues by expanding the availability of affordable, longer-term finance and creating customized solutions for these high-impact segments.
Focus on Jobs, Inclusion, and Economic Growth
World Bank Country Director for Nigeria, Mathew Verghis, commented on the project's approval, emphasizing its core objectives. "FINCLUDE is about jobs, opportunity, and inclusion," Verghis stated. "By opening finance for viable MSMEs—particularly women-led firms and agribusinesses—Nigeria can accelerate growth and deliver tangible benefits in communities nationwide."
He added that the project would simplify the process for deserving small businesses to get the funding required for expansion and hiring. Support for lenders practicing inclusive finance and the provision of fairer, longer-term loans are expected to strengthen the enterprises that power the Nigerian economy.
The operation aims to mobilize private investment and widen access to inclusive and innovative financial products for MSMEs across the country. By working through the Development Bank of Nigeria, the project will also enhance the capacity of various financial institutions—including microfinance banks and non-bank entities like fintech firms—to offer larger loans with more reasonable repayment terms.
