Fostering Inclusive Finance for MSMEs in Nigeria (FINCLUDE) Project

pipeline

The proposed FINCLUDE Project leverages the platforms of the Development Bank of Nigeria (DBN) and its subsidiary, the Impact Credit Guarantee Limited (ICGL), to drive inclusive MSME finance. Through these catalytic institutions, the Project will deploy a package of complementary, inclusive, and innovative instruments, tailored to the diverse needs of MSMEs in Nigeria. Designed as an Investment Project Financing (IPF) with performance-based conditions (PBCs), the Project comprises three interrelated components aimed at delivering inclusive and innovative financial and non-financial solutions tailored to Nigeria’s diverse MSME landscape. Each component leverages a complementary mix of market-based instruments designed to: crowd-in private capital, test market innovations, and promote financial sustainability. They include: Component 1: Inclusive and Innovative MSME Finance Products, with 2 sub-components: (i) Sub-component 1.1 : Catalytic Financing for MSMEs through the provision of Tier 2 subordinated capital to eligible Participating Financial Institutions (PFIs) and expand their capacity to lend to MSMEs in Nigeria; and (ii) Sub-component 1.2: MSME Capital Market Access to support the design, establishment, capitalization, and operationalization of an MSME Investment Fund for the provision of: (a) equity and quasi-equity financing to eligible MSMEs; and (b) long-term debt to eligible MSMEs. Component 2: De-risking and Mobilizing Private Capital for MSMEs through the capitalization of ICGL to provide Partial Credit Guarantees (PCG) for loans issued by PFIs to MSMEs. Component 3: Technical Assistance, composed of two sub-components: (i) Sub-component 3.1: Modernizing and Digitizing the Ecosystem to finance targeted TA investments to enhance structural efficiency and promote digitization and modernization across the MSME finance ecosystem. The modernization effort will focus on strengthening integration and responsiveness across the three key interrelated actors in the MSME finance chain, i.e. DBN-PFIs-MSMEs; and (ii) Sub-component 3.2: Project Management and Implementation Support to strengthen implementation capacity, including the engagement of additional dedicated technical personnel; oversight, fiduciary management, compliance, and results tracking.