The World Bank is set to approve a $500 million financing package for Nigeria, targeted at widening access to funding for micro, small, and medium enterprises (MSMEs) nationwide under the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project. The initiative is structured to catalyse private sector capital and encourage the development of innovative financial solutions for small businesses, using the infrastructure and reach of the Development Bank of Nigeria (DBN) and its subsidiary, Impact Credit Guarantee Limited.
Discussions around the facility are currently ongoing, with approval by the World Bank Group’s board expected on December 19, 2025. Of the $500 million total, $400 million will be provided by the International Bank for Reconstruction and Development (IBRD), while $100 million will come from the International Development Association (IDA). The balance of the project’s estimated $2.39 billion total cost—approximately $1.89 billion—is expected to be sourced from commercial lenders as unguaranteed financing. The Federal Government of Nigeria will act as the borrower, with DBN designated as the implementing agency.
The FINCLUDE initiative is organised around three core pillars: expanding access to inclusive and innovative financial products for MSMEs, reducing risk and mobilising private capital through partial credit guarantees, and delivering technical assistance to modernise and digitise Nigeria’s MSME finance ecosystem. Under the first pillar, qualifying financial institutions will receive Tier 2 subordinated capital, while an MSME-focused investment fund will provide equity and long-term debt financing. This approach is designed to crowd in private investment, pilot new market solutions, and support long-term financial sustainability.
The technical assistance component will focus on building the capacity of financial institutions, strengthening regulatory supervision, and upgrading the MSME finance value chain that connects DBN, lenders, and entrepreneurs. The World Bank noted that DBN’s strong performance history and institutional capacity position it as a key partner in delivering the project’s intended outcomes.
In its project appraisal document, the World Bank highlighted that Nigeria’s ongoing macroeconomic reforms—such as the removal of fuel and foreign exchange subsidies and the unification of the exchange rate—have contributed to improved economic stability. These measures have expanded fiscal space, enhanced foreign exchange liquidity, and helped moderate inflation, which stood at 18 per cent as of September 2025. The International Monetary Fund (IMF) forecasts real GDP growth of 3.9 per cent for Nigeria in 2025.
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However, the report also underscored enduring challenges in access to finance for MSMEs, particularly for women-owned businesses and the agricultural sector. In 2024, these segments accounted for just over five per cent of total bank credit. Elevated interest rates and limited credit depth continue to constrain lending to smaller enterprises.
If endorsed, the FINCLUDE project will further expand Nigeria’s portfolio of World Bank-supported interventions. As at June 30, 2025, Nigeria’s external debt was valued at $46.98 billion, with the World Bank accounting for $19.39 billion. This includes $18.04 billion from IDA and $1.35 billion from IBRD, representing 41.3 per cent of the country’s total external debt. Between 2023 and 2025, World Bank lending to Nigeria is projected to reach $9.65 billion, with grants bringing overall support to $9.77 billion. Nigeria remains the largest IDA borrower in Africa and the third-largest globally, with exposure increasing from $17.1 billion in September 2024 to $18.5 billion by September 2025.
Economists have observed that while the expanding loan pipeline has the potential to drive long-term development, the actual impact will depend on efficient utilisation and disciplined fiscal management. Lagos-based economist Adewale Abimbola noted that concessional financing from multilateral institutions such as the World Bank can underpin viable projects with medium-term revenue potential, emphasising that the critical factor lies in deploying the funds effectively to stimulate sustainable growth, boost revenue generation, and enhance public service delivery.
