The Nigerian government plans to introduce a ₦198 billion ($1.2 million) syndicated loan fund to boost Micro, Small, and Medium Enterprises (MSMEs) in the country. The goal is to improve access to affordable credit for MSMEs that are often overlooked for venture funding.
Starting in Q1 2025, the initiative will offer loans—up to ₦400,000 ($289)—with a 9% interest rate, a five-year tenure, and a one-year moratorium, enabling businesses to grow and innovate sustainably.
This is a relief for MSMEs which, unlike tech startups, have limited access to funding and capital to expand their businesses.
MSMEs have loans and grants. Tech startups have venture capital. The rationale is not hard to see. VCs want outsized returns and there is often pressure to pick wide-margin winners. High-growth tech startups, unlike MSMEs, characterise these ventures that can hit a wider market—as a result of their underlying tech-enabled services—and scale quickly.
VCs have also voiced their preference for tech companies due to their globalisation, which again, exposes them to a wide market that increases their chances of attracting high-value customers that move the business.
On the other hand, MSMEs are the mundane, usually “non-tech” ventures that lack that same global application. They are not usually VC darlings because they cannot sell to the entire country at the same time.
MSMEs may not be the hyper-scale, exponential growth startups that VCs love, but they contribute significantly to Nigeria’s economy. Their positioning and closeness to low-end users makes it easy for them to sell much-needed, everyday consumer goods.
But MSMEs have typically lacked access to credit and loan facilities. Instead, tech startups and microfinance banks have since stepped up to close this funding gap for MSMEs.
With the government’s backing, this loan fund for MSMEs could position the informal sector to become a driver of economic growth, closing the funding gap in the often-overlooked area.
