The World Bank is expected to approve a $500 million loan to Nigeria today, aimed at expanding access to finance for micro, small, and medium enterprises (MSMEs) across the country through the Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project. The facility is designed to mobilise private capital and promote innovative financial products for small businesses, leveraging the platforms of the Development Bank of Nigeria (DBN) and its subsidiary, Impact Credit Guarantee Limited.
Negotiations on the loan are ongoing, with approval by the World Bank Group’s board anticipated on December 19, 2025. Of the total $500 million, $400 million will come from the International Bank for Reconstruction and Development (IBRD) and $100 million from the International Development Association (IDA). The remaining $1.89 billion of the project’s estimated $2.39 billion cost is expected from commercial lenders as unguaranteed financing. The Federal Government will be the borrower, while DBN will serve as the implementing agency.
The FINCLUDE project is structured around three main components: providing inclusive and innovative finance products for MSMEs, de-risking and mobilizing private capital through partial credit guarantees, and offering technical assistance to modernise and digitise Nigeria’s MSME finance ecosystem. Under the first component, eligible financial institutions will receive Tier 2 subordinated capital, and an MSME investment fund will provide equity and long-term debt financing, aiming to attract private investment, test market innovations, and promote financial sustainability.
Technical assistance will strengthen the capacity of financial institutions, improve regulatory oversight, and modernise the MSME finance value chain linking DBN, lenders, and entrepreneurs. According to the World Bank, DBN’s proven track record and implementation capacity make it a central partner in achieving the project’s objectives.
In its appraisal report, the World Bank noted that Nigeria’s ongoing economic reforms, including the removal of fuel and foreign exchange subsidies and exchange rate unification, have begun stabilising the economy, enhancing fiscal space, improving FX liquidity, and easing inflation to 18 per cent as of September 2025. The IMF projects real GDP growth of 3.9 per cent for 2025.
Despite these gains, the report highlighted persistent gaps in access to finance for MSMEs, women entrepreneurs and the agriculture sector, which accounted for just over five per cent of total bank credit in 2024. High interest rates and shallow credit penetration continue to limit lending to smaller enterprises.
If approved, FINCLUDE will add to Nigeria’s growing portfolio of World Bank-supported programmes. As of June 30, 2025, Nigeria’s external debt stood at $46.98 billion, with the World Bank accounting for $19.39 billion,$18.04 billion from IDA, and $1.35 billion from IBRD, representing 41.3 per cent of total external debt. Between 2023 and 2025, World Bank loans to Nigeria are projected to reach $9.65 billion, with grants bringing total support to $9.77 billion. Nigeria is currently the largest IDA borrower in Africa and the third-largest globally, with exposure rising from $17.1 billion in September 2024 to $18.5 billion in September 2025.
Economists have noted that while the rising loan pipeline could support long-term development, its benefits depend on effective deployment and prudent fiscal management. Lagos-based economist Adewale Abimbola said concessional loans from multilateral institutions like the World Bank can support viable projects with medium-term revenue prospects, stressing that the key issue is how well the funds are utilized to generate sustainable growth, strengthen revenue, and improve public services.
