Review of government interventions that promote access to credit for Micro, Small and Medium Enterprises (MSMEs) in Nigeria – Mar 2012

Micro, Small and Medium Enterprises (MSMEs) play an important role in any emerging economy by creating employment opportunities and reducing poverty. The EFInA Access to Financial Services in Nigeria 2010 survey revealed that 38.1 million adults are self employed, of which 19.6 million adults (51.1% of those that are self employed) are the main income earners in their household. However, the MSME sector in Nigeria remains fragile and fragmented and many businesses operate in an environment that presents considerable challenges.

As is the case worldwide, MSMEs struggle with a number of growth barriers and the one most commonly cited is the inability to successfully access credit. Despite a large and rapidly growing economy with a competitive banking sector, lending to the sector is extremely low, with less than 10% of MSMEs receiving a loan from a Deposit Money Bank (DMB); and MSME loans accounting for approximately 5% of DMBs’ total lending portfolios.

Consequently, the Nigerian government has launched a number of interventions such as the Small and Medium Enterprise Credit Guarantee Scheme (SMECGS), the Agricultural Credit Guarantee Scheme Fund (ACGSF) and the National Economic Reconstruction Fund (NERFUND) to promote access to credit for the MSME sector.

In order to support the development of the MSME sector, EFInA commissioned research to:

  1. Identify the challenges that financial institutions (especially deposit money banks) face in providing finance to MSMEs
  2. Review current and past government interventions aimed at increasing access to credit Β for MSMEs
  3. Assess the impact of these interventions in increasing access to credit for MSMEs

The output of the research will primarily be used to make recommendations to regulators/policy makers as to which interventions are best suited to effectively support and promote access to credit for MSMEs in Nigeria.


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