How lenders should prepare for the new credit guarantee era

Nigeria’s new National Credit Guarantee Company (NCGC) is about to roll out with ₦100 billion in capital. Instead of lending money itself, NCGC will partner with banks, microfinance lenders, fintechs and other financial institutions to share the risk on loans, essentially acting as a guarantor for up to 60% of the principal on qualifying loans. In practice, this means lenders can reach more small businesses and underserved borrowers with confidence, since a portion of each loan is backed by the government’s guarantee.

But it also means lenders must adjust the way they operate, design products, set policies and work with customers to make the most of the program. The following guidance grounded in NCGC’s own structure, principles and announcements explains how banks and fintechs can get ready internally, shape the right loan offerings, align their credit and risk frameworks, educate borrowers, and coordinate across teams for this new guarantee-driven lending ecosystem.

Also read: Open banking in Africa: Continental progress made as of 2025

Credit: National Credit Guarantee Company (NCGC)

Gearing up your operations

First, lenders should prepare their internal processes and systems for the mechanics of guaranteed lending. That means training loan officers, underwriters and operations staff on how the guarantee works (for example, how to apply for the guarantee, what documentation NCGC will require, and how claims are filed in case of default). 

It can help to set up a dedicated “guarantee desk” or point person in the bank who coordinates guarantee requests and liaises with NCGC. Within credit and risk teams, expect to adjust credit assessment tools: NCGC provides partial coverage (up to 60% of principal, not a complete transfer of risk, so rigorous underwriting remains essential. Experts stress that a successful guarantee scheme depends on disciplined risk calibration and good governance. In other words, lenders should not loosen credit checks or underwriting standards simply because a loan is partially guaranteed. It may be useful to review risk governance policies now to make sure every loan is appraised carefully, even those seeking guarantees, in line with NCGC’s principle of preserving borrower discipline.

On the technology and data side, lenders should also strengthen their capabilities. NCGC’s leadership has emphasized using technology and data analytics to “de-risk borrowers” and make more informed lending decisions. This means banks and fintechs may want to boost their credit scoring systems, data-sharing with credit bureaus, or automated decision tools so they can efficiently identify viable clients for guarantee-backed loans. Improving information flows (for instance, integrating NCGC’s guarantee tracking into your loan management system) will help monitor the guaranteed portfolio. Lenders should also be ready to comply with any eligibility criteria NCGC sets for participating financial institutions. For example, maintaining strong governance, meeting liquidity or capital standards, and, as indicated in NCGC guidance, possibly having robust environmental/social policies and credit bureau partnerships. Finally, coordination with regulators and industry bodies may be required: NCGC plans “robust consultations” with banks and stakeholders to align with global best practices, so be prepared to engage in working groups or training sessions as they roll out.

Designing guarantee-friendly loan products

Loan products will need to be structured so they qualify for NCGC coverage. NCGC is explicitly targeting loans to certain sectors and borrower groups, so lenders can package special products accordingly. For example, the NCGC framework highlights agriculture, renewable/clean energy, local manufacturing and industrial projects, tech and digital enterprises, solid minerals, textiles and export-oriented SMEs. A lender could design a dedicated “green energy loan” or “agribusiness equipment loan” knowing those are in-scope for guarantees. Similarly, because NCGC prioritizes women-led and youth-led businesses, lenders might partner with women entrepreneurs’ associations or youth business hubs to market a “women’s business loan” or “startup loan” under the program. In each case, be sure the loan terms fit NCGC rules: set the maximum loan size, term and interest structure in line with what the guarantee scheme allows. (NCGC’s initial materials suggest up to 60% of principal can be covered, and no mention is made of covering interest, so borrowers will still owe the full interest, this should be clearly communicated to customers.)

Because a portion of each loan will be guaranteed, lenders can consider sharpening borrower terms to take advantage of the risk cushion. In practice, this can mean lower interest rates or longer tenors than usual for targeted segments, since the guaranteed portion makes the lender more comfortable. It also means revisiting collateral requirements: with a partial guarantee in place, NCGC guidelines encourage more flexible collateral (one of the scheme’s goals is to reduce “collateral constraints” that keep small firms out of credit). In short, loans can be made more accessible, but without sacrificing credit discipline. As one expert notes, effective guarantee lending should result in “shorter turnaround times, lower collateral requirements, and tailored financial products” for borrowers. Lenders should therefore ease out approval processes and relax collateral only for that guaranteed 60% slice, while still monitoring borrowers closely.

Ultimately, consider co-lending structures: NCGC also offers “co-guarantees” (partnering with other institutions to share risk) and “performance bond guarantees” for contract-backed lending. If your institution finances contract performance (say, to a manufacturer bidding on a big project), look into NCGC’s performance bond guarantee product to back that exposure. And don’t forget the scheme’s technical assistance service – NCGC will provide capacity-building support for both lenders and borrowers. Banks could incorporate this by sending loan officers and clients to NCGC workshops or using their training materials to improve loan readiness (for instance, helping borrowers prepare stronger business plans so loans are more likely to succeed).

Also read: What is the National Credit Guarantee Company (NCGC)

Aligning your credit, risk and compliance policies

Nigerian lenders should review their existing credit and risk policies to ensure alignment with the new guarantee framework. A good first step is to study the Central Bank’s guidelines for credit guarantee companies (issued in 2022) and NCGC’s published eligibility criteria. Make sure your credit and compliance teams understand any new documentation or reporting requirements. For example, there may be standard guarantee contracts or claim forms that become part of the loan file. Compliance officers should verify that loans submitted for guarantee meet both NCGC’s rules and the CBN’s credit regulations.

Within your credit policy, explicitly account for the partial-risk nature of NCGC loans. Keep in mind the scheme’s guiding principle of “risk-sharing, not risk transfer”. In practice, this means your bank continues to bear at least 40% of any loss, so loan grading and pricing should still reflect that retained risk. Risk managers may need to update portfolio stress tests to factor in NCGC-covered loans. At the same time, lenders should be aware of moral hazard risks: an analyst cautions that guarantee schemes falter when governance is weak or lending becomes “subsidize(d) failure”. In short, maintain strict credit discipline and internal checks even on guaranteed loans.

Finally, emphasize transparency and governance in your guarantee processes. Industry experts and regulators have pointed out that success depends on credibility i.e the program must be seen to honor guarantees promptly and fairly. Lenders can prepare by setting up clear, auditable workflows: document every step (from guarantee application to claim payment), train staff to follow the rules to the letter, and coordinate with auditors or NCGC’s feedback channels. This builds trust with both the government guarantor and your customers.

Educating borrowers and preserving discipline

On the borrower side, lenders will need a communication and engagement strategy. The NCGC scheme is aimed at “viable borrowers” who were previously excluded, so banks should proactively inform eligible clients about the new opportunity. At loan counseling sessions or in marketing materials, explain that the government is now sharing 60% of the risk on certain loans, which could mean better terms for the borrower. Stress the benefits; for example, loans can be approved faster and collateral requirements reduced, so borrowers know why this is a significant advantage.

At the same time, reinforce that the borrower’s obligations have not changed. The NCGC guarantee covers only a portion of principal, and borrowers are fully responsible for repaying the entire loan (including interest) as usual. Lenders should clarify that defaults still affect credit standing and that NCGC’s support is not a bailout. This aligns with NCGC’s own motto of preserving “borrower discipline” even under guarantees. In practice, loan officers might use checklists or brief training for customers: for example, hand out plain-language FAQs about guaranteed loans, or walk clients through how the guarantee works at signing. Some banks might even offer short financial literacy or business planning workshops (possibly capitalizing on NCGC’s technical assistance resources) so that borrowers are better prepared to use the funds profitably.

Lastly, remember NCGC’s inclusion goals. Tailor your outreach especially to youth and women entrepreneurs (the scheme explicitly supports these groups) as well as agriculture and other target industries. For instance, hold loan seminars in rural areas or market days, partner with local business groups, or use mobile apps/social media in local languages. The objective is to ensure that “viable borrowers, from farmers to manufacturers,” feel informed and confident about accessing these new loans.

Coordinating teams for guarantee success

NCGC’s leaders stress that this initiative will only succeed through broad partnership and collaboration. Within your institution, that means breaking silos and pulling together cross-functional teams. For example, set up an internal working group or task force on NCGC lending that includes credit officers, risk managers, product developers, IT staff, legal/compliance and marketing. This team can build the end-to-end processes (from product design and IT integration to staff training and borrower outreach) ensuring everyone is on the same page about the scheme’s rules and goals.

Externally, coordinate with the rest of the financial ecosystem. The NCGC MD has specifically called for collaboration between commercial banks, microfinance banks, fintechs, DFIs and even insurance companies. Lenders should engage with industry associations (e.g. bankers’ committees, fintech platforms) and with NCGC itself through stakeholder events. Sharing experiences and best practices will be important: for instance, join NCGC-sponsored workshops or roundtables to learn how others are sourcing guarantee-eligible clients or handling guarantee paperwork. Do not forget to involve your policy and PR teams, too: educating regulators and the public about your guarantee-backed products (as part of raising awareness) can smooth the way for any needed regulatory support.

In short, think “teamwork” at every level. Just as NCGC is partnering across the financial sector to de-risk lending, your bank or fintech should set up internal partnerships across departments and participate in the broader network of PFIs. By coordinating efforts you can build a stable guarantee program that truly delivers on NCGC’s promise of growth.

Also read: What NCGC will (and won’t) do for Nigerian lenders

Lenders who prepare now will serve more, and better

The new credit guarantee era is a big opportunity to expand responsible lending in Nigeria. Lenders that proactively align their operations, products and policies with NCGC’s framework will be best positioned to serve more clients, and at better terms, than before. Remember that guarantees are meant to “nudge” banks into markets they would otherwise avoid, not to replace banks or subsidize failures.

By getting operations in gear, crafting products for guarantee coverage, tightening risk frameworks, educating borrowers, and working in cross-team partnership, lenders can safely extend more credit. In the words of the NCGC leadership, doing so will help ensure “viable borrowers… are met with opportunity, not exclusion.” 

If you’re unsure how to position your lending operations to take full advantage of credit guarantees, feel free to reach out to us at [email protected]. We’re happy to talk through what this means for your lending business.