The World Bank is expected to approve a $500m loan to Nigeria on Friday as part of efforts to expand access to finance for micro, small and medium enterprises across the country.
The proposed facility, titled the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project, aims to mobilise private capital and promote innovative financial products for small businesses, according to information obtained from the World Bank.
According to local media reports, negotiations on the loan are ongoing, and approval by the World Bank Group’s board is expected on Friday.
The report added that the latest commitment by the World Bank of $500m to the project out of an estimated total cost of $2.39bn.
It explained that $400m will be provided by the International Bank for Reconstruction and Development, while $100m will come from the International Development Association.
The report noted that the Federal Government of Nigeria will be the borrower under the arrangement, with the Development Bank of Nigeria serving as the implementing agency with overall responsibility for managing the funds, while the remaining $1.89bn required for the project is expected to be provided by commercial lenders as unguaranteed financing.
According to the World Bank, the FINCLUDE project will leverage the platforms of the Development Bank of Nigeria and its subsidiary, Impact Credit Guarantee Limited, to deepen credit access for MSMEs.
“The proposed FINCLUDE Project leverages the platforms of the Development Bank of Nigeria and its subsidiary, the Impact Credit Guarantee Limited, to drive inclusive MSME finance,” a document from the World Bank read.
“Through these catalytic institutions, the project will deploy a package of complementary, inclusive, and innovative instruments tailored to the diverse needs of MSMEs in Nigeria.”
According to the report, the World Bank Group remains Nigeria’s largest single creditor, accounting for $19.39bn of the total, comprising $18.04bn from the IDA and $1.35bn from the IBRD. This represents 41.3 per cent of the country’s external debt, underscoring the bank’s dominant role in financing Nigeria’s development initiatives.
GIK/APA