Nigeria’s small and medium-sized enterprises (SMEs) are facing tightening access to credit despite record lending by development finance institutions, raising concerns about the reach and effectiveness of existing financing interventions.
The Bank of Industry (BOI) said it disbursed ₦636 billion to over 7,000 businesses in 2025, its largest annual outlay. The funds were deployed across manufacturing, agribusiness, infrastructure, ICT, services, and the creative economy, supported by international funding and federal government intervention programmes.
However, SME stakeholders say the record lending has not translated into broad access for Nigeria’s vast SME base. The National President of the Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, said most small businesses remain locked out of affordable financing due to high interest rates, stricter lending conditions, and declining risk appetite among commercial banks.
“Access to credit has become more restrictive in practical terms,” Egbesola said, noting that borrowing costs and compliance requirements have placed available funds beyond the reach of many SMEs. He added that banks are increasingly prioritising capital preservation amid macroeconomic uncertainty and recapitalisation pressures, shifting lending toward government securities with lower risk and predictable returns.
ASBON described the financing gap as structural rather than temporary, noting that Nigeria has over 40 million SMEs, many of them nano and micro enterprises operating as kiosks, corner shops, or small workshops.
Limited access to capital, the association warned, is already affecting business survival, with many SMEs operating below capacity, scaling down, or shutting operations entirely posing risks to job creation and economic growth. ASBON also noted a decline in non-bank funding sources such as grants and corporate support programmes.
Although BOI reported that ₦178 billion of its 2025 financing went to SMEs, a larger share ₦375 billion was allocated to large enterprises, reflecting lender preference for borrowers with stronger financial capacity. BOI said its interventions supported job creation and enterprise expansion nationwide, including targeted programmes for youth-led, women-owned, and rural businesses.
Industry analysts say financing constraints remain widespread despite these interventions. Business operators also cited limited capacity at institutions such as the Development Bank of Nigeria and the Bank of Agriculture to compensate for declining private-sector credit.
The financing imbalance is emerging as a policy concern for the administration of Bola Ahmed Tinubu, which has prioritised industrial expansion and enterprise development as part of its economic reform agenda.
Reacting to the situation, Dr Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), called for targeted, concessionary financing and credit guarantee schemes to ease borrowing conditions for SMEs. He urged the Central Bank of Nigeria (CBN) to improve policy transmission and moderate interest rates, warning that without addressing infrastructure and regulatory constraints, SMEs would remain financially excluded.