NCGC Targets Lower Interest Rates On MSME Loans

The National Credit Guarantee Company Limited (NCGC) has said its credit guarantee scheme could help lower interest rates on loans to micro, small and medium-sized enterprises (MSMEs) by reducing the risks banks face when lending to businesses.

The Managing Director and Chief Executive Officer of NCGC, Dr Bonaventure Okhaimo, disclosed this on Tuesday during a press briefing at the State House, Abuja.

He explained that the company’s primary mandate was to improve access to finance, but its credit guarantee framework could also make borrowing more affordable by reducing the risk premium banks add to interest rates.

According to Okhaimo, lenders consider factors such as the cost of funds, inflation and the risks associated with particular borrowers when determining interest rates.

He said NCGC’s intervention was designed to address the additional risk premium banks charge when lending to MSMEs, which often struggle to obtain financing because they lack sufficient collateral.

“What NCGC is doing now is to attack that risk premium,” he said.

Okhaimo explained that by guaranteeing a portion of eligible loans, the company could reduce the potential losses banks face when borrowers default, thereby encouraging financial institutions to extend credit to businesses they might otherwise reject.

He, however, clarified that NCGC did not determine the interest rates charged to beneficiaries because it was not the institution providing the loans directly.

Rather, the company provides partial guarantees to participating financial institutions, sharing the risk associated with lending to eligible borrowers.

The NCGC chief executive also disclosed that the company was working with the Central Bank of Nigeria to explore arrangements under which credit guarantees could provide capital relief for lenders, potentially encouraging them to increase financing for MSMEs.

As of October 21, 2026, NCGC guarantees had supported loans worth N64.13 billion, backed by N30.19 billion in guarantee value.

Okhaimo said the programme had reached 174,495 borrowers across all 36 states and the Federal Capital Territory through 19 participating financial institutions, including commercial banks, microfinance banks and development finance institutions.

The programme’s performance report showed that 22,616 beneficiaries had accessed formal financing for the first time, while women accounted for 74,503 borrowers, representing 42.7 per cent of the total.

Trade and commerce, alongside agribusiness and agro-processing, accounted for more than 80 per cent of beneficiaries supported by the scheme.

The company has also introduced GuaranteeHer, a gender-responsive credit guarantee initiative designed to expand access to finance for women-owned businesses.

Under the programme, NCGC targets more than N100 billion in lending over five years, with plans to finance at least 20,000 women-owned MSMEs and support 150,000 jobs.

The initiative provides for guarantee coverage of up to 70 per cent of eligible loan exposure, with a maximum obligor limit of N50 million per borrower.

Established by the Federal Government on May 29, 2025, with the approval of President Bola Tinubu, NCGC was licensed by the Central Bank of Nigeria on August 9, 2025, and operates under the supervision of the Federal Ministry of Finance.

The company has a capital base of N100 billion, with equal 25 per cent stakes held by the Bank of Industry, Ministry of Finance Incorporated, Nigeria Sovereign Investment Authority and Nigerian Consumer Credit Corporation (CREDICORP).

Okhaimo said NCGC would continue to expand access to credit for women, young people, MSMEs and other productive sectors, while strengthening partnerships with financial institutions and improving its guarantee management systems.

He said the company’s ultimate goal was to ensure that viable Nigerian businesses were not denied credit solely because they lacked sufficient collateral.