Small, Medium Enterprises Agency Targets Microfinance Bank Launch, Cheaper Funding

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has disclosed plans to establish a dedicated Microfinance Bank in 2026 as part of a broader strategy to expand access to affordable finance for micro, small and medium enterprises (MSMEs) across the country.

The SMEDAN director-general, Charles Odii, disclosed this during a media briefing in Abuja, where he outlined the agency’s 2026 financial roadmap for the MSME sector, including cheaper credit, stronger funding partnerships, and improved monitoring of disbursements.

According to him, SMEDAN is seeking regulatory approvals from the Central Bank of Nigeria (CBN) to operate its own microfinance institution, a move aimed at addressing longstanding challenges associated with indirect lending through third-party microfinance banks.

He explained that reliance on external microfinance partners had often limited effective monitoring, citing cases where partner institutions were unable to deliver or were shut down after funds had been disbursed.

“With a SMEDAN-controlled microfinance outfit, we can better track disbursements, ensure funds reach the right beneficiaries and improve accountability,” he said.

The proposed bank is also expected to strengthen SMEDAN’s ability to attract funding from development partners and international financial institutions, many of which, he noted, preferred to channel funds through institutions directly controlled by implementing agencies.

On interest rates, the SMEDAN boss stated that the agency had adopted a firm stance against high-cost loans, insisting that all MSME funding must be offered at single-digit interest rates.

He disclosed that SMEDAN had successfully negotiated loan facilities priced between 9 and 9.5 per cent, the lowest currently available in the market through partnerships with the Bank of Industry (BoI), state governments and selected commercial banks.

He explained that under these arrangements, several state governments, including Enugu, Kaduna, Katsina and Zamfara, have committed to matching funds sometimes up to N1 billion to support small businesses within their jurisdictions.

The loans, he said, are strictly targeted at business activities, such as working capital support, acquisition of workspaces, and procurement of tools and equipment, stressing that diversion of funds for personal use would not be tolerated.

He also revealed that SMEDAN had mobilised over N12 billion in affordable financing for MSMEs, enabling hundreds of thousands of small businesses to access credit at rates far below prevailing commercial terms.

In addition to loans, he said the agency has continued to deploy grants to nano businesses through its Conditional Grant Scheme, while also promoting financial inclusion by supporting beneficiaries in opening bank accounts and building credit histories.

Looking ahead to 2026, the SMEDAN chief said the planned microfinance bank would complement ongoing funding initiatives, expand grant and loan programmes and help scale access to affordable capital for millions of MSMEs nationwide.

He added that affordable financing remained central to the government’s job creation agenda, noting that improved access to credit, alongside capacity building and infrastructure support, would play a critical role in reducing unemployment and strengthening Nigeria’s MSME ecosystem.