The World Bank has approved a credit of $500 million about N83 billion for Nigeria to increase access to finance by Small and Medium Enterprises (SMEs).The World Bank Gives $500m Credits to Nigeria: The bank, which made it known, said the credit approved by its Board of Executive Directors would come from its International Bank for Reconstruction and Development’s lending window.
The Development Finance Project would produce stable funding to support the growth of Nigeria’s SMEs through the establishment of a development finance institution.
According to the bank, the project is in support of government’s efforts to promote the growth and job creation potential of the private sector through improved access to financing.
It noted that only 6.7 per cent of Nigerian firms reported having a loan or active line of credit in 2014, adding that SME lending made up only around 5 per cent of the total commercial bank lending.
The World Bank Country Director for Nigeria, Marie-Francoise Marie-Nelly, said, “women entrepreneurs in Nigeria are held back by knowledge gaps, limited access to markets and challenges regarding land ownership rights, which in turn, limit their access to finance. Specific attention will be paid to strengthening the capacity of businesswomen to address these challenges.”
The Lead Financial Sector Specialist and Task Team Leader of the Project, Arnaud Dornel, was quoted as saying, “the DFI will be operationally and financially sustainable, and will be subject to regulation and supervision by CBN, which will enforce requirements similar to those applied to commercial banks, including strong prudential transparency and accountability standards.”
The World Bank added that the project drew on experiences from other countries, such as Germany, Brazil, South Africa and Mexico, and had been developed in collaboration with other donors supporting development finance reforms in Nigeria, namely, the African Development Bank, Germany’s KFW, French Development Agency, and the United Kingdom’s Department for International Development.
The project will be implemented by the Ministry of Finance and is expected to run for seven years.