In Nigeria, starting and sustaining a business has never been easy. For many micro, small, and medium enterprises (MSMEs), the biggest challenge is financing. A staggering 83.9% of SMEs reported in 2024 that inflation had severely impacted their businesses. And access to loans? That’s often a dead end.
It’s not just the economy that makes things hard. Banks are cautious. They’ve been burned before. Many SME support programmes backed by the government in the past were plagued by poor design, political interference, and red tape. As a result, over the last seven years, about 1.9 million businesses have shut down. Between 2023 and 2024 alone, nearly 30% of Nigeria’s 24 million registered MSMEs closed shop, wiping out an estimated ₦94 trillion in economic value.
The failure rate is alarming. Over 50% of MSMEs don’t survive their first year. And more than 95% won’t make it past five. Most of this collapse is tied to issues beyond just finance: inflation, high energy costs, poor infrastructure, and policy inconsistency all play a role.
So when the Federal Government of Nigeria announced the establishment of the National Credit Guarantee Company Limited (NCGC), expectations were naturally high, but so was the skepticism.
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A bold idea, not a new one, possibly a better one
Officially launched in July 2025, the NCGC is a government-backed financial institution with a capital commitment of ₦100 billion. Its mandate is straightforward on paper: make it easier for Nigerian businesses to access loans by reducing the risk for lenders. But unlike past efforts, NCGC isn’t just throwing money at the problem. It’s betting on a different model, one built around guarantees, not handouts.
Instead of lending directly to businesses, the NCGC provides partial credit guarantees to banks, microfinance institutions, fintechs, and other licensed financial partners. This way, financial institutions are more willing to lend, knowing that up to 60% of their exposure is protected.
The idea isn’t new. Nigeria has tried credit guarantee schemes before. The Small and Medium Enterprises Credit Guarantee Scheme, launched in 2010 with ₦200 billion and an 80% guarantee, barely made a dent. Banks didn’t bite. Bureaucracy was thick, risks were high, and SMEs were poorly prepared. Other initiatives like the Small and Medium Enterprises Equity Investment Scheme also fell flat. Billions have been poured into CBN intervention funds over the years, but less than 20% reached real businesses.
So what makes NCGC different?
How the NCGC plans to get it right this time
What distinguishes the National Credit Guarantee Company from previous efforts is its deliberate and comprehensive design, which appears to take into account the lessons from past failures. Unlike earlier schemes that were marred by vague objectives and weak implementation strategies, the NCGC has anchored its operations on internationally recognised risk-sharing principles that help maintain a balanced and sustainable credit environment.
The company does not aim to remove risk entirely from the equation, which is often where past schemes fell short. Instead, it recognises that lending will always carry an element of uncertainty, and its role is to distribute that risk more equitably between borrowers and lenders. This approach fosters responsible lending practices while still enabling institutions to serve customers they might otherwise consider too risky.
To ensure that access to credit reaches a wide range of businesses without diluting financial discipline, NCGC applies a tiered eligibility framework. This means guarantees are designed with varying terms based on borrower profiles, loan sizes, and sectoral considerations. The aim is not only to expand inclusion but to ensure that guarantees are meaningful and tailored to the realities of different business types. The company also maintains strict regulatory alignment with the Central Bank of Nigeria, which provides an added layer of accountability and consistency in the credit market.
Each guarantee issued by the NCGC is designed to be both irrevocable and impact-oriented. That is, once issued, the guarantee provides the lender with firm backing, and is only deployed in cases where loans genuinely meet pre-defined criteria aimed at supporting the broader goals of economic inclusion, productivity, and job creation. This makes the company’s role more than just administrative; it becomes a meaningful part of the lending ecosystem, with clear responsibility for the success of its interventions.
In terms of actual financial products, the NCGC offers a range of guarantees suited to different financing needs. Individual Guarantees are tailored for larger, project-specific loans where a single enterprise may require substantial backing. These are especially relevant for capital-intensive sectors such as manufacturing, green infrastructure, or export production.
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On the other hand, Portfolio Guarantees cover entire groups of loans, particularly in sectors that involve high volumes of similar, smaller loans like agriculture, fashion, or the creative economy. This product helps lenders spread their exposure across a large number of clients while still having a safety net for aggregate default risks.
Then there are Performance Bond Guarantees, which are particularly useful for SMEs involved in public procurement or contracts requiring financial assurance. These guarantees give businesses the support they need to bid for and execute contracts that would otherwise be out of reach due to risk constraints.
But financing instruments alone are insufficient to solve the deeper structural issues that affect both SMEs and lenders. This is where the NCGC’s provision of technical assistance comes in. The company is building a support mechanism that addresses not just the financial, but also the operational weaknesses that limit credit access.
For borrowers, this might include capacity-building in areas such as financial management, recordkeeping, and business planning all of which improve their eligibility for loans. For lenders, it could involve support in developing more accurate credit appraisal models or tools for managing SME loan portfolios. This kind of assistance helps reduce default risk and improves long-term credit performance, making it easier for institutions to continue lending in the future.
By approaching risk-sharing as a dynamic, structured, and context-specific practice rather than a blanket policy, the NCGC is positioning itself to deliver not just access to credit, but also the kind of systemic improvement that could transform Nigeria’s lending ecosystem in the years ahead.
Who the NCGC is built to support
The National Credit Guarantee Company is not limiting its reach to conventional small businesses or narrowly defined commercial sectors. Its coverage has been deliberately designed to reflect the complexity and diversity of Nigeria’s real economy. This means extending support to a wide range of enterprises that have long struggled to access formal credit, either due to their size, the nature of their operations, or the sectors in which they operate.
Among its core beneficiaries are local manufacturers and value chain operators, many of whom face persistent funding gaps that restrict productivity and limit their ability to scale. The NCGC also places a strong emphasis on youth-led and women-led enterprises, recognising the role of inclusive financing in addressing unemployment, wealth gaps, and long-term economic resilience. These demographics often lack the collateral or formal business records required by traditional lenders, which makes targeted support all the more essential.
Export-oriented businesses, especially those operating outside the oil sector, are another major focus. Diversifying Nigeria’s export base has remained a national priority for years, yet access to export financing has lagged behind. Through its guarantee mechanisms, the NCGC hopes to address some of these long-standing gaps and support businesses that contribute to foreign exchange earnings and broader economic stability.
The company is also attentive to emerging and underserved sectors. Enterprises focused on renewable energy, clean technology, and other climate-resilient innovations are included within its target portfolio. So are digital enterprises, such as fintech startups and logistics platforms, that are driving innovation in service delivery and job creation. In addition, the NCGC has made room for non-interest Islamic enterprises, offering support to businesses operating within Shariah-compliant frameworks who have historically had limited access to suitable financial instruments in Nigeria’s credit system.
From agriculture and agribusiness to solid minerals, fashion, textiles, and small-scale manufacturing, the sectors covered by the NCGC reflect those with the highest potential for inclusive growth and employment generation. Many of these sectors have remained underfunded despite their clear developmental value. By extending credit guarantees to financial institutions that serve these industries, the NCGC aims to close the financing gap that has long held them back and to support a more productive and broad-based economy.
Leadership, capital, and backing
The NCGC has high-level backing and experienced leadership. President Bola Ahmed Tinubu not only approved the company’s establishment but also handpicked its board and management. Former Speaker of the House of Representatives, Rt. Hon. Yakubu Dogara, serves as Chairman. Bonaventure Okhaimo is the Managing Director and Chief Executive Officer. Other appointees include:
The board also features representatives from institutions like the Bank of Industry, Nigeria Sovereign Investment Authority, Nigeria Consumer Credit Corporation, and the Ministry of Finance Incorporated, signalling a coordinated effort across key public finance bodies.
The World Bank Group is also involved, providing technical assistance to support the company’s operations. Its input will likely shape areas such as governance, risk oversight, and day-to-day implementation.
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What success will require
Getting a national credit guarantee scheme off the ground is just the beginning. The harder part is making sure it actually delivers on its promise particularly in an environment as difficult as Nigeria’s today.
The NCGC is stepping into an economy where small businesses are already under significant pressure. Inflation peaked above 35% in 2023, and many businesses are still reeling from the effects. Fuel costs swing unpredictably. Power supply remains inconsistent. Insecurity continues to disrupt operations in many parts of the country. On top of all that, the naira has been on shaky ground, making it hard for businesses to plan or price their products with any confidence.
Most small enterprises are already juggling too much, some have taken on too much debt, while others have no credit history or even basic documentation. Many are unregistered, operate informally, or have never interacted with the banking system. For these businesses, even well-intentioned interventions can feel out of reach if they’re not thoughtfully designed.
To stand a chance, the NCGC will need to operate with clarity, flexibility, and speed. The application process must be intuitive and easy to navigate, particularly for micro and informal businesses that are unfamiliar with formal lending. Local language support, simplified digital tools, and mobile-first platforms should be the default, not an afterthought. Otherwise, the people who need the support most will be shut out once again.
Equally important is how the company chooses to report on its activities. Regular disclosures that show how many guarantees have been issued, where the funds are going, how supported businesses are faring, and what sectors are seeing the most impact will be critical. If these numbers remain vague or inaccessible, trust will erode quickly. And once that happens, the program could start to unravel.
There’s also the question of what happens after a guarantee is issued. For many businesses, the loan itself is just one piece of the puzzle. If the NCGC is to drive long-term results, there must be investment in wraparound support things like access to accountants, financial education, basic digital tools, and ongoing advisory services. These don’t need to come directly from NCGC, but they must be available within the ecosystem, especially for businesses in rural or hard-to-reach areas. Without that, even the best-designed guarantees may not translate into business growth or loan repayment.
Can it change anything?
It’s still too early to say. The NCGC only began full operations in July 2025, and much of its impact will depend on how it performs over the next 12 to 24 months. But the problem it seeks to address is deep-rooted and long overdue for attention.
A well-run guarantee scheme has the potential to reshape how credit flows in Nigeria. It could make lenders more confident about supporting small and growing businesses. It could reduce the reliance on traditional collateral, open doors for young entrepreneurs, and bring more businesses into the formal economy. Over time, this could strengthen job creation, drive creativity, and give the economy a more stable base.
But it won’t happen automatically. Success will require ongoing commitment from every part of the ecosystem including government institutions, financial providers, development partners, and the entrepreneurs themselves. Everyone has a role to play in making sure the program delivers more than just headlines.
Credit guarantees will not solve all the structural challenges facing Nigeria’s economy. But they could help shift the tide if implemented with seriousness, built on sound principles, and adapted to the lived realities of Nigerian businesses trying to stay afloat.
