World Bank Set to Approve $500m MSME Loan for Nigeria

The World Bank is expected to approve a $500 million financing package for Nigeria today as part of a broader initiative aimed at expanding access to credit for micro, small and medium enterprises across the country.

The funding, under the proposed Fostering Inclusive Finance for MSMEs in Nigeria project, is designed to unlock private capital and support innovative financial solutions for small businesses. Approval by the World Bank Group’s board is anticipated following ongoing negotiations.

Out of the project’s estimated total cost of $2.39 billion, the World Bank will provide $500 million, comprising $400 million from the International Bank for Reconstruction and Development and $100 million from the International Development Association. The remaining $1.89 billion is expected to come from commercial lenders through unguaranteed private financing.

Nigeria’s Federal Government will be the borrower, while the Development Bank of Nigeria will serve as the implementing agency responsible for managing the funds. The project will also leverage the operations of Impact Credit Guarantee Limited to expand lending to underserved businesses.

The initiative will focus on deploying inclusive financial products, mobilising private capital through partial credit guarantees, and providing technical support to modernise Nigeria’s MSME finance ecosystem. This includes support for subordinated capital to financial institutions and the creation of an investment fund offering equity and long-term debt to small businesses.

The World Bank said the project is expected to strengthen Nigeria’s credit market, improve financial sustainability for MSMEs, and reduce barriers faced by women-owned enterprises and agribusinesses.

While noting recent economic reforms that have improved fiscal stability and investor sentiment, the bank cautioned that access to finance remains uneven. Agriculture and small businesses continue to receive a disproportionately low share of bank credit, constrained by high interest rates and shallow financial penetration.

Economists say the effectiveness of the loan will depend on how efficiently it is deployed, stressing that concessional borrowing can support long-term growth if tied to productive, revenue-generating projects.