The Federal Government has got a $500 million loan from the World Bank to fund medium and small scale enterprises (MSMEs).
A statement from the World Bank said its “Board of Executive Directors has approved a US$500 million International Bank for Reconstruction and Development (IBRD) credit to increase access to finance for medium and small scale enterprises (MSMEs) in Nigeria to stimulate economic growth and create jobs.”
The loan, also known as a Development Finance Project, was approved on Thursday to provide stable funding to support the growth of Nigeria’s MSMEs through the establishment of a Development Finance Institution (DFI).
The DFI will provide term funding to eligible financial intermediaries to lend to MSMEs as well as provide partial credit risk guarantees to participating commercial banks.
Limited access to finance is a key obstacle to enterprise growth and entrepreneurship, particularly for young people, and it is a major obstacle faced by SMEs. Only 6.7 per cent of Nigerian firms reported having a loan or active line of credit in 2014 and SME lending made up only around five per cent of total commercial bank lending.
“The DFI will be operationally and financially sustainable and would be subject to regulation and supervision by the Central Bank of Nigeria, which will enforce requirements similar to those applied to commercial banks, including strong prudential transparency and accountability standards,”said Arnaud D. Dornel, Lead Financial Sector Specialist and Task Team Leader of the Project.
“Women entrepreneurs in Nigeria are held back by knowledge gaps, limited access to markets, and challenges regarding land ownership rights which in turn limits their capacity to access to finance.
“Specific attention will be paid to strengthening the capacity of business women to address these challenges,” said Marie Francoise Marie-Nelly, World Bank Country Director for Nigeria.
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