Nigeria’s small business development agency is seeking regulatory approval to operate a microfinance bank, a move aimed at tightening the flow, monitoring, and impact of funds meant for micro, small, and medium enterprises while attracting more international development finance into the sector.
The agency said the planned microfinance bank would allow it to disburse credit directly to small businesses, improve oversight of loan utilisation, and reduce leakages that often limit the effectiveness of public and donor-backed funding. The proposal is part of a broader push to significantly expand Nigeria’s MSME base in 2026, as government efforts intensify to bring informal operators into the formal economy.
Beyond the banking licence, the agency disclosed that it is working with the Presidency to add 1 million small businesses to the formal sector, in addition to its plan to register at least 250,000 new businesses next year. The expansion drive is expected to improve access to finance, markets, and policy support for small firms that currently operate outside official systems.
Speaking during a media engagement in Abuja, the agency outlined a five-point agenda for 2026 built around business formalisation, policy reform, financing, capacity development, and infrastructure. According to the agency, the coming year would mark the point at which reforms and groundwork laid over the past two years begin to translate into measurable outcomes for MSMEs nationwide.
On policy, the agency said it would unveil a revised National MSME Policy in 2026, noting that the current framework, last reviewed in 2021, expires at the end of this year. The review process is expected to be inclusive, drawing input from operators across the 36 states and the Federal Capital Territory to ensure the policy reflects the realities of small businesses on the ground. Completion is targeted for the first quarter of 2026.
Financing is set to be a central pillar of the agenda, with the agency emphasising access to affordable credit. It disclosed that it has negotiated funding of about N12 billion at single-digit interest rates, ranging from 9 to 9.5 percent, for small businesses. About 500,000 MSMEs have already accessed such loans, but the target is to scale this to between three million and five million enterprises better to reflect the size and importance of the sector.
“There’s going to be a lot of funding for our small businesses, and by funding, I mean cheap funding. The money that we have negotiated is at a single digit,” the agency said, stressing that the cost of credit remains a major constraint for MSMEs.
The capacity development was identified as another key focus, with plans to significantly expand training under the Integrated Capital Support Scheme. The agency argued that many small businesses struggle to access available funds not because money is unavailable, but because they lack the skills, structures, and records required to be considered bankable.
On infrastructure, the agency said it is working with state governments and development partners to replicate industrial hubs across the country, improve access to reliable power, and reduce operating costs for small businesses. It linked improved MSME infrastructure directly to job creation, economic stability, and national security, noting that thriving small enterprises play a critical role in absorbing labour and strengthening local economies.
For MSMEs across Nigeria and the wider African region, the proposed microfinance bank, expanded formalisation drive, and cheaper credit signal a renewed focus on moving small businesses from survival mode into sustainable growth, with policy, finance, and infrastructure increasingly aligned to their needs.
