Banks Urged to Support Small Businesses in Nigeria

As of 15 September 2026, Nigeria's banking sector has undergone significant reforms, resulting in stronger capital buffers and improved financial stability. However, a critical issue remains: micro, small, and medium-sized enterprises (MSMEs) are among the least served by formal credit.

The World Bank reports that fewer than one in 20 Nigerian MSMEs have access to bank credit, facing barriers such as high collateral requirements, short loan tenors, and expensive borrowing costs. This situation creates a "missing middle," where businesses are too large for microfinance but too small for conventional banking.

The World Bank has identified this as a structural weakness in Nigeria's financial system, estimating unmet MSME credit demand at approximately N13 trillion. Consequently, many businesses resort to financing expansion through retained earnings or informal borrowing, which hampers their ability to grow and create jobs.

Domestic credit to the private sector stands at only about 13% of GDP, highlighting the urgent need for banks to reassess their lending practices to support MSMEs.