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…Calls for stronger projects to unlock $100bn infrastructure funding
Nigeria’s small and medium-sized enterprises, the engine room of job creation, remain largely shut out of formal bank financing, even as the country’s banking system grows stronger and macroeconomic stability improves, the World Bank warned on Tuesday
Delivering a keynote address at the Chartered Institute of Bankers of Nigeria’s 19th Banking and Finance Conference themed; Building a resilient economy in an era of disruptions: Strategic imperatives for banks and the financial services industry in Abuja, World Bank Country Director for Nigeria, Matthew Verghis, said fewer than one in 20 MSMEs can access bank credit, with about nine in 10 operating informally.
He described this “missing middle” as firms too big for microfinance tickets and too small for commercial banks’ risk appetite, as a critical bottleneck to job-rich growth.
“Credit is bypassing the job creators,” Verghis said, noting that domestic credit to the private sector stands at only about 13 per cent of GDP, among the lowest for comparable economies. Agriculture, a major employer, receives just around 6 per cent of total credit, while MSMEs account for roughly 1 per cent.
The comments come as recent Central Bank of Nigeria (CBN) data show private sector credit rising to N83.43 trillion in July 2026, up from N80.59 trillion in April. Yet analysts say much of this lending remains concentrated in trade, finance and government securities, with limited penetration into productive, employment-generating sectors.
Verghis argued that the challenge is not a shortage of capital. Nigeria’s banking system holds about $160 billion in assets, bolstered by $3.4 billion of fresh capital from recapitalisation. According to him, pension and insurance assets add another $26.5 billion, while a global pool of roughly $110 trillion in institutional capital is searching for yield, tenor and scale.
The question is allocation,” he said. “Balance sheets are strong. The issue is where the money is going.”
Beyond firms, Verghis pointed to Nigeria’s massive infrastructure financing need as another area where credit must flow. Citing government analysis, he said about $100 billion a year is required to close the infrastructure gap, with energy and transport alone capable of absorbing almost 60 per cent of that requirement.
Engineers and planners have repeatedly flagged the same figure, warning that rapid urbanisation and climate risks are compounding the deficit. The National Integrated Infrastructure Master Plan estimates total investment needs at $2.3 trillion over the long term.
He added that Nigeria needs to turn this latent demand into a bankable pipeline that can pull in private capital. That, according to him, means better project preparation, stronger corporate governance, and investment-grade structures that pension funds, insurers and other institutional investors can underwrite.
While applauding the banking sector’s strengthened capital buffers and Nigeria’s exit from the FATF grey list, Verghis cautioned that new risks are building beneath the surface.
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He noted that as the exchange rate stabilises, the naira has held around the N1,300/$1 mark with a narrowed parallel-market gap, banks may be tempted to take on more currency risk, allowing vulnerabilities to accumulate “in the calm”.
At the same time, with inflation easing from 33 per cent to about 16 per cent and the policy rate expected to gradually decline from its peak, wide net interest margins and rich yields on government securities that have boosted profitability are likely to compress.
“Banks can no longer rely solely on government securities for yields. You have to start redirecting that capital towards job-creating growth”, Verghis said.
To bridge the financing gap, the World Bank called on Nigeria’s development finance institutions and sovereign wealth fund to deploy blended-finance instruments at scale. These include partial credit guarantees, first-loss positions and risk-sharing facilities that can protect senior commercial lenders and mobilise pension and insurance capital into productive sectors.
The Bank’s $500 million FINCLUDE programme, approved in December 2025, is already designed to expand access to finance for MSMEs, but Verghis stressed that such interventions must be catalytic, crowding in multiples of private capital rather than substituting for it.
“Scarce public capital must be used catalytically. Every public dollar should be structured to crowd in multiples of commercial and institutional capital”, he said.
Verghis acknowledged that Nigeria’s macroeconomic reforms, the petrol subsidy removal, foreign-exchange unification and new tax laws, were painful but necessary.
The gains, he said, are now visible: GDP growth around 4 per cent, inflation down to 16 per cent, rising external reserves and a current account surplus of roughly 5 per cent of GDP.
“Stability was the platform we had to aspire to. Jobs are the destination.
The next phase of the reform agenda will be judged not by balance-sheet metrics alone, but by how effectively financial intermediation translates into employment, enterprise growth and inclusive prosperity”, Verghis concluded.
