The Dutch Entrepreneurial Development Bank (FMO) and First City Monument Bank (FCMB) have signed a $25 million NASIRA guarantee agreement aimed at expanding funding to agricultural, youth, and women-owned SMEs in Nigeria. This initiative targets client groups typically deemed too risky by banks due to the lack of collateral.
Empowering High-Risk Groups
Funded by the European Commission, the NASIRA program is one of FMO’s most innovative initiatives. It encourages local banks to extend their funding to small entrepreneurs without collateral. The guarantee effectively replaces the need for collateral, and evidence shows that these entrepreneurs, primarily women and young people, are not inherently riskier than others.
Critical Job Creation
With Nigeria’s population at 220 million, job creation is crucial. The country faces significant economic challenges, including high unemployment and a 70% depreciation of its currency over the past year. Providing small loans to high-risk groups enables them to start and expand businesses, offering vital income sources for their families.
Additional Financial Support
In addition to the $25 million NASIRA guarantee, FMO will support FCMB with a $60 million syndicated loan. This includes $20 million from FMO, $30 million through the European Financing Platform (on behalf of BIO, DEG, EIB, FINNFUND, Proparco, and SWEDFUND), and $10 million through FMO Investment Management. The loan aims to grow FCMB’s existing portfolio of small and medium-sized entrepreneurs (SMEs).
EU’s Role in Economic Diversification
At the signing ceremony during the 9th Nigeria EU Business Forum, EU Ambassador to Nigeria and ECOWAS Ms. Samuela Isopi highlighted the importance of the agreement. She stated, “We are very happy to see that the EU investment instruments, such as the European Fund for Sustainable Development (EFSD+) guarantees, have come to Nigeria to play a catalytic role in leveraging private sector investments for the benefit of the real sector, economic diversification, and employment creation, especially for youth and women.”
Supporting Agri-Tech Innovation
The agreement also includes a technical assistance (TA) program. Through this initiative, FCMB and FMO will select and support 15 scalable early-stage agri-tech businesses in Nigeria. These businesses will employ disruptive models to address significant issues in the agricultural sector, contributing to SDG2: zero hunger and food security.
