In any thriving economy, Micro, Small, and Medium Enterprises (MSMEs) are the unsung heroes. In Nigeria, they’re not just the backbone of the economy — they are its lifeblood.
These small businesses and entrepreneurs drive job creation, fuel innovation, and keep the wheels of Nigeria’s economy in constant motion. Yet, despite their immense contributions, MSMEs face an overwhelming barrier: access to funding.
MSMEs account for a staggering 96% of Nigeria’s businesses, employing over 80% of the workforce. According to the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), they also contribute nearly 48% to the country’s GDP. Despite these crucial numbers, securing financing remains a significant challenge for many of them.
Traditional banks have long cited the lack of collateral and a proven track record as reasons for not extending loans to these promising businesses. Unfortunately, many MSMEs don’t survive their first five years due to the inability to secure the capital they need.
Reports from the Central Bank of Nigeria (CBN) and SMEDAN paint a grim picture: only 5.5% of MSMEs have access to credit from formal financial institutions, while 70% rely on personal savings or informal funding sources.
The Missing Link: Funding
At the heart of Nigeria’s economic struggles lies a critical missing link — affordable, accessible, and reliable funding for small businesses. To address this issue, industry leaders like Obafemi Darabidan, Head of Department at Covenant Capital, are calling for the introduction of patient capital with reasonable interest rates to help MSMEs scale and thrive.
During the recent SME Funding Conference in Lagos, Darabidan highlighted the need for cheaper and patient capital options that would enable small businesses to flourish.
Enter ICGL: A Game-Changer in MSME Financing
This is where Impact Credit Guarantee Limited (ICGL) steps in. Established in 2019 as a subsidiary of the Development Bank of Nigeria (DBN) through a project with the World Bank, ICGL is revolutionizing how MSMEs access funding by providing guarantees on loans.
By sharing the risk with financial institutions, ICGL is helping MSMEs secure the funds they need to grow.
Anthony Asonye, Managing Director of ICGL, explains the importance of their guarantee facility: “Our facility provides comfort to lenders, encouraging them to increase their lending to MSMEs. This allows small businesses to access the critical funding needed to execute their business plans, create jobs, and contribute to the economy.”
Real Impact for MSMEs
Since its inception, ICGL has guaranteed over ₦278 billion in loans to MSMEs across Nigeria. This support has made it possible for small business owners to access funding that would have otherwise been out of reach, providing them with the resources needed to thrive.
As Nigeria continues its journey toward sustainable economic growth, ICGL’s role in empowering MSMEs cannot be overstated. By pioneering innovative solutions to the funding challenges that plague small businesses, ICGL is unlocking the vast potential within Nigeria’s MSME sector and helping drive the economic progress the nation urgently needs.
The Bigger Picture
Tony Okpanachi, Managing Director/CEO of DBN, shared the broader impact of ICGL’s efforts: “Through risk de-escalation for Participating Financial Institutions (PFIs), DBN has disbursed over N786 billion in loans to 494,819 MSMEs, which has helped create over 1.2 million jobs.”
Looking forward, Okpanachi emphasized ICGL’s unwavering commitment to providing vital credit guarantees. This continued support will not only bridge the financing gap for more MSMEs but will also empower a new generation of entrepreneurs. With this, ICGL is contributing significantly to the revitalization of the Nigerian economy, injecting fresh energy and prosperity into the nation’s economic engine.
