The Federal Government has reaffirmed its commitment to improving SME access to finance through the National Credit Guarantee Scheme, which shares lending risk with commercial banks to encourage loans to small enterprises.
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How the scheme works
The framework allows banks to lend to qualifying SMEs while the government covers a portion of potential defaults. This risk-sharing model is intended to reduce collateral constraints and high-interest barriers that have historically restricted small business access to credit.
Government officials highlighted that the scheme prioritises manufacturers, agribusiness operators, and service enterprises. By lowering the perceived risk, more banks are expected to participate in SME lending, potentially unlocking billions in new financing.
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Economic significance
Access to affordable credit remains a persistent challenge for Nigerian SMEs. High interest rates, collateral requirements, and informal operations frequently prevent small businesses from expanding operations or adopting new technologies.
The credit guarantee framework is anticipated to increase liquidity, encourage formalisation and promote sustainable enterprise growth. Analysts also note that the scheme could stimulate investor confidence and contribute to broader economic diversification efforts.
Read also: FG earmarks N11.76bn to strengthen MSME growth in 2026
Implementation challenges
While the scheme presents opportunities, challenges remain regarding awareness among SMEs, monitoring and accountability. Ensuring that funds reach viable businesses and not just intermediaries is critical for its success.
The initiative represents a proactive government effort to bridge financing gaps for small businesses. Effective implementation, transparency, and proper targeting will determine whether it delivers measurable impact in Nigeria’s SME ecosystem.
