SMEDAN Launches N500m Interest-Free Fund To Boost Small Businesses

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has unveiled a N500 million zero-interest revolving fund to improve access to finance for Micro, Small and Medium Enterprises (MSMEs), with the agency adopting an association-based lending model to strengthen accountability, improve loan recovery and expand financial inclusion.

SMEDAN director-general, Charles Odii, announced the initiative during an engagement with the Commerce and Industry Correspondents Association of Nigeria (CICAN) in Abuja as part of activities marking the 2026 World MSME Day.

The initiative, known as the Grow Fund for Small Businesses in Nigeria, will be disbursed through cooperatives, trade unions, business membership organisations and recognised associations rather than directly to individual entrepreneurs.

Odii said the association-based lending model was designed to ensure that the loans reach genuine business owners while improving monitoring, accountability and repayment, allowing the revolving fund to support more enterprises over time.

According to him, access to affordable finance remains one of the biggest obstacles facing Nigerian MSMEs, making the intervention necessary.

“We visited traders at one of the markets today to engage directly with them because it is not enough to sit in offices and make policies without understanding their realities.

“Many of the challenges they raised border on financing, which is why we are launching the Grow Fund for Small Businesses in Nigeria,” he said.

Odii explained that beneficiaries would be able to use the interest-free loans to increase working capital, acquire business tools and equipment, and secure workspaces needed to expand their operations.

“We are not giving the money to individuals directly. We are giving it to associations that understand their members and can manage the funds responsibly,” he said.

He said repayment terms would be agreed with each participating association to provide flexibility while ensuring the long-term sustainability of the revolving loan scheme.

According to him, the initial N500 million fund is expected to grow significantly through partnerships with state governments, development partners and other institutions willing to provide matching funds.

Beyond the financing programme, Odii called on state governors to partner with the Federal Government in establishing SME development and skills acquisition centres across the country, describing such infrastructure as critical to improving access to finance, creating jobs and preparing Nigerian businesses to compete in emerging markets.

He said stronger collaboration between federal and state governments would help build the enterprise support infrastructure needed to drive sustainable MSME development nationwide.

Odii explained that unlike conventional commercial bank loans, which are subject to the banking sector’s Global Standing Instruction (GSI) framework, the new financing arrangement channels credit through recognised associations and cooperatives that will assess beneficiaries, manage disbursement, monitor utilisation and ensure repayment.

He disclosed that the initiative had already commenced in Lagos and Ogun states but said SMEDAN’s long-term objective was to establish enterprise development centres in every state of the federation.

“My call to action is for state governors to work with us to create skill acquisition centres and SME development centres. Let us work together to create the infrastructure that our small businesses need,” he said.

Odii said greater investment in MSME infrastructure had become increasingly important as Nigeria prepares to host a major international cultural event in Lagos next year, noting that many local businesses require financing and capacity support to meet the expected increase in demand.

“When we went to Algeria last year, we saw how their government had already provided funding to small businesses to enable them produce goods before visitors arrived. Nigeria should not be different,” he said.

The SMEDAN director-general also disclosed that the agency was engaging development finance institutions, including the African Development Bank (AfDB), the World Bank and GIZ, to mobilise additional funding for Nigerian MSMEs and expand access to affordable finance.

Also speaking, the Senior Special Assistant to the President on Industrial Training and Manpower Development, Adamson Ayinde, commended the association-based lending model, saying it would improve monitoring, strengthen accountability and reduce the diversion of government-supported loans and business equipment.

Ayinde said channeling intervention funds through recognised associations would ensure that more genuine entrepreneurs benefit while improving transparency and the overall effectiveness of government support programmes for small businesses.