Nigeria’s widening ₦130 trillion credit shortfall is severely constraining the growth and survival of an estimated 39 million micro, small and medium enterprises (MSMEs), according to Dele Oye, Chairman of the Alliance for Economic Research and Ethics LTD/GTE.
In a statement on Monday, Oye warned that Nigeria’s financial system is failing its productive sector, describing the mismatch between MSME financing needs and available institutional support as a deep-rooted breakdown in capital allocation with far-reaching implications for jobs, productivity and economic expansion.
Brandspur Banking News Desk reports that MSMEs dominate Nigeria’s business landscape and account for the bulk of private-sector employment, yet access to formal credit remains extremely limited. As a result, many small businesses rely on informal financing or costly short-term loans, restricting their ability to scale operations, invest in innovation or remain competitive.
Oye noted that Nigeria’s Development Finance Institutions (DFIs) collectively hold assets slightly above ₦8 trillion, a fraction of the estimated ₦130 trillion financing required by MSMEs. He said the disparity underscores the depth of the challenge facing the economy.
“Fewer than one in twenty MSMEs in Africa’s largest economy can access formal bank credit,” he stated, adding that in a country where MSMEs account for 96 per cent of businesses, nearly half of GDP and over 80 per cent of private-sector jobs, the situation represents a systemic failure rather than a minor market inefficiency.
While welcoming the World Bank-approved $500 million Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) programme, Oye said the intervention highlights the underlying weaknesses of Nigeria’s credit system. The initiative, approved in December 2025, is expected to mobilise $1.89 billion in private capital and support 250,000 enterprises, including women-led and agribusiness ventures.
He argued, however, that dependence on multilateral guarantees to unlock domestic lending reflects deeper governance and incentive misalignments within the financial sector.
Oye attributed banks’ reluctance to lend to MSMEs to prevailing macroeconomic conditions, including elevated interest rates. With the Central Bank of Nigeria’s Monetary Policy Rate at 26.50 per cent and inflation still elevated, he said the real cost of borrowing remains prohibitive for small businesses.
He further noted that Nigeria’s domestic credit to the private sector stands at about 17.6 per cent of GDP, significantly below peer economies such as South Africa and Kenya, placing Nigeria among the world’s most financially underdeveloped markets.
To address the challenge, Oye urged commercial banks to strengthen SME lending frameworks through improved underwriting capacity, sector-specific expertise and technology-driven risk assessment. He also called on MSMEs to formalise operations, maintain proper financial records and build long-term banking relationships.
According to him, while FINCLUDE will benefit thousands of enterprises, Nigeria’s MSME financing gap can only be closed through comprehensive domestic reforms involving government agencies, DFIs and commercial lenders.
Referring to Bola Tinubu’s Renewed Hope Agenda, Oye said the true test lies in whether policymakers and financial institutions will implement the demanding reforms required to unlock sustainable credit for small businesses.
He stressed that Nigeria’s MSMEs are not seeking rhetoric, but timely access to affordable financing capable of driving growth, employment and long-term
