In light of Nigeria’s challenging economic conditions and the persistent high energy costs faced by Small and Medium-sized Enterprises (SMEs), a new study has highlighted the potential of green financing initiatives. The study calls for active backing from financial institutions such as the Bank of Industry (BOI), the African Development Bank (AfDB), and the Nigerian Export-Import Bank (NEXIM) to help SMEs thrive despite these obstacles.
This finding comes from a recent study by Nigerian researcher Mr. Oghenevwire Okugbere, titled “Access to Sustainable Finance in Stimulating SME Growth and Economic Resilience in the United States for Overall Economic Growth and Development,” which was published in February 2025. Although Okugbere’s research primarily focuses on the U.S. economy, it offers valuable insights into sustainable finance for SMEs and compares practices across the U.S., Nigeria, and Canada.
Sustainable Finance: A Key to Boosting SMEs in Nigeria
Okugbere notes that Nigeria, as a developing nation, faces unique challenges in accessing sustainable finance for SMEs. Despite its wealth in natural resources, Nigerian SMEs are hindered by the high costs of energy, limited access to affordable financial support, and a lack of government-tailored strategies for integrating green technologies.
However, he acknowledges some progress. In 2020, Nigeria launched its first Green Bond, which signaled a growing recognition of how sustainable finance could boost economic development. Green financing initiatives are now beginning to help Nigerian SMEs, especially in sectors like agriculture and renewable energy. Institutions such as the BOI, AfDB, and NEXIM are backing projects that assist SMEs in adopting sustainable practices, such as transitioning to solar energy in rural agriculture or improving waste management systems.
Despite these advances, Okugbere points out that Nigeria still lags behind in comparison to countries like Canada, South Africa, and the G7 nations, where sustainable finance has become more widespread. The key barriers in Nigeria remain limited financial literacy, a lack of accessible green capital, and insufficient government support.
The Role of SMEs in Economic Development
Globally, SMEs account for about 90% of businesses and more than half of total employment, playing a vital role in national economies. In emerging economies like Nigeria, SMEs contribute as much as 40% of national GDP. Okugbere highlights that the success of recent U.S. administrations has hinged significantly on the growth and development of SMEs, underscoring their contributions to job creation, innovation, and economic expansion.
“SMEs in the U.S. represent around 99.9% of all businesses and employ nearly half of the private sector workforce. For any economy to evolve, it is crucial to ensure SMEs have access to sustainable finance to foster growth and resilience, particularly as global attention shifts towards sustainability and climate action,” said Okugbere.
The Importance of Sustainable Finance for SMEs
Okugbere defines sustainable finance as financial products and investments that promote environmentally responsible, socially conscious, and ethically governed businesses. As the global economy continues to focus on addressing climate change and inequality, SMEs must integrate sustainability into their business models. Sustainable finance will enable these businesses to adapt to emerging market opportunities and navigate the evolving economic landscape.
Some of the advantages of sustainable finance for SMEs, according to Okugbere, include fostering green innovation, ensuring long-term growth, enhancing resilience against economic shocks, and opening up new markets.
Challenges to Accessing Sustainable Finance
Okugbere concludes by acknowledging the global challenges SMEs face in accessing sustainable finance, including inadequate financial infrastructure, a lack of awareness and education about sustainable financing, and concerns about creditworthiness and risk.
To overcome these barriers, there is a pressing need for increased education, infrastructure development, and enhanced access to green capital for SMEs, especially in countries like Nigeria, where the potential for growth is immense but hindered by current limitations.
