In a significant move to tackle the persistent funding challenges facing small businesses, the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has taken a concrete step towards establishing its own microfinance bank. The agency has formally applied for an operating license from the Central Bank of Nigeria (CBN).
A Direct Channel for SME Financing
The proposed microfinance bank is designed to revolutionise how government-backed support reaches entrepreneurs. SMEDAN's Director-General, Charles Odii, disclosed that the bank would enable the agency to directly disburse, track, and monitor funds dedicated to micro, small, and medium enterprises (MSMEs). This model aims to slash bureaucratic delays, reduce lending costs, and ensure loans get to intended beneficiaries much faster.
Odii revealed this strategic initiative during a media briefing in Abuja, where he outlined the agency's five-point agenda for 2026. The move signals a shift towards a more finance-driven and structured approach to SME development in Nigeria.
Ambitious Target: One Million New Formal Businesses
Beyond the banking plan, SMEDAN is pursuing an aggressive expansion of Nigeria's formal business sector. The agency is currently advocating for Presidential support to formalise an additional one million small businesses. This ambitious goal is separate from its existing target to register at least 250,000 new enterprises in 2026.
According to Odii, the objective is to dramatically widen the country's formal business ecosystem, bringing a vast number of informal operators into the structured tax and financial systems. He stated that foundational work has been ongoing for two years, with 2026 earmarked as the year for these efforts to yield visible, tangible results.
New National MSME Policy on the Horizon
A cornerstone of SMEDAN's 2026 strategy is the review and launch of a new National MSME Policy. The current policy framework, last updated in 2021, is set to expire at the end of 2025. Odii confirmed that the revised policy will be crafted through extensive consultations across all 36 states and the Federal Capital Territory (FCT) to ensure it addresses the real-world challenges of business owners nationwide. The new policy is scheduled for completion and unveiling in the first quarter of 2026.
Affordable Credit and Capacity Building as Key Pillars
Access to cheap funding remains a critical hurdle, and SMEDAN has identified it as a top priority. The DG announced that the agency has already negotiated funding worth approximately N12 billion at single-digit interest rates between 9% and 9.5%. While about 500,000 MSMEs have benefited from such schemes, SMEDAN plans to massively scale up, aiming to reach between three and five million businesses to better match the sector's size.
Capacity development forms another crucial pillar. SMEDAN intends to expand training programmes under its Integrated Capital Support Scheme to enhance the bankability of MSMEs and prepare them to access available funds. The final focus area is infrastructure, where the agency is collaborating with state governments and development partners to replicate industrial hubs, improve power access, and lower operational costs across the country.
This comprehensive agenda, combining financial access, formalisation, policy renewal, training, and infrastructure, positions 2026 as a potentially defining year for Nigeria's small business economy.
