September 28, 2014 by Everest Amaefule 1 Comment
The World Bank’s Board of Executive Directors has approved a credit of $500m to increase access to finance for Small and Medium Enterprises in the country.
The bank which disclosed this in a statement made available to our correspondent in Abuja on Sunday said the credit would come from its International Bank for Reconstruction and Development lending window.
The Development Finance Project will provide stable funding to support the growth of Nigeria’s SMEs through the establishment of a Development Finance Institution.
The DFI will provide term funding to eligible financial intermediaries to lend to SMEs.
The DFI will also provide partial credit risk guarantees to participating commercial banks.
According to the bank, the project is in support of government’s efforts to promote the growth and job creation potential of private sector through improved access to financing.
Limited access to finance is a key obstacle to enterprise growth and entrepreneurship,
particularly for young people, and it is a major obstacle faced by SMEs, the bank said.
The bank said only 6.7 per cent of Nigerian firms reported having a loan or active line of credit in 2014 adding that SME lending made up only around five per cent of total commercial bank lending.
World Bank Country Director for Nigeria, Marie-Francoise Marie-Nelly, said, “Women entrepreneurs in Nigeria are held back by knowledge gaps, limited access to markets, and challenges regarding land ownership rights which in turn limits their capacity to access to finance.
“Specific attention will be paid to strengthening the capacity of business women to address these challenges.”
Lead Financial Sector Specialist and Task Team Leader of the Project, Arnaud D. Dornel, said “The DFI will be operationally and financially sustainable and would be subject to regulation and supervision by the Central Bank of Nigeria, which will enforce requirements similar to those
applied to commercial banks, including strong prudential transparency and accountability standards.”
The bank added that the project drew on experiences from other countries, such as
Germany, Brazil, South Africa and Mexico, and had been developed in collaboration with other donors supporting development finance reforms in
Nigeria, namely the African Development Bank, Germany’s KFW, French Development Agency, and the United Kingdom’s Department for International Development.
The project will be implemented by the Ministry of Finance and is expected to run for seven years.
The bank which disclosed this in a statement made available to our correspondent in Abuja on Sunday said the credit would come from its International Bank for Reconstruction and Development lending window.
The Development Finance Project will provide stable funding to support the growth of Nigeria’s SMEs through the establishment of a Development Finance Institution.
The DFI will provide term funding to eligible financial intermediaries to lend to SMEs.
The DFI will also provide partial credit risk guarantees to participating commercial banks.
According to the bank, the project is in support of government’s efforts to promote the growth and job creation potential of private sector through improved access to financing.
Limited access to finance is a key obstacle to enterprise growth and entrepreneurship,
particularly for young people, and it is a major obstacle faced by SMEs, the bank said.
The bank said only 6.7 per cent of Nigerian firms reported having a loan or active line of credit in 2014 adding that SME lending made up only around five per cent of total commercial bank lending.
World Bank Country Director for Nigeria, Marie-Francoise Marie-Nelly, said, “Women entrepreneurs in Nigeria are held back by knowledge gaps, limited access to markets, and challenges regarding land ownership rights which in turn limits their capacity to access to finance.
“Specific attention will be paid to strengthening the capacity of business women to address these challenges.”
Lead Financial Sector Specialist and Task Team Leader of the Project, Arnaud D. Dornel, said “The DFI will be operationally and financially sustainable and would be subject to regulation and supervision by the Central Bank of Nigeria, which will enforce requirements similar to those
applied to commercial banks, including strong prudential transparency and accountability standards.”
The bank added that the project drew on experiences from other countries, such as
Germany, Brazil, South Africa and Mexico, and had been developed in collaboration with other donors supporting development finance reforms in
Nigeria, namely the African Development Bank, Germany’s KFW, French Development Agency, and the United Kingdom’s Department for International Development.
The project will be implemented by the Ministry of Finance and is expected to run for seven years.
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