SMEs Access Only 0.51% of Banks’ Credit Over 10 Years in Nigeria

Data from the Central Bank of Nigeria (CBN) reveals that small and medium-sized enterprises (SMEs) in Nigeria face severe financing constraints, despite being the country’s largest source of jobs. Analysis of the CBN Statistical Bulletin (2014–2023) shows that out of N199.63 trillion in total private sector credit, SMEs received only N1.01 trillion, representing just 0.51 percent over the decade.

Credit allocation to SMEs has fluctuated but remained marginal. In 2014, SMEs accessed N116.07 billion (0.88 percent), which fell sharply to N2.95 billion (0.02 percent) in 2015. Lending remained low in 2016 and 2017 at N10.75 billion annually (0.07 percent), rising modestly to N123.93 billion (0.71 percent) in 2019. Credit dropped again in 2020 (N62.51 billion, 0.32 percent) before improving to N465.37 billion in 2023, the highest share of the decade at 1.18 percent.

Despite intervention by agencies such as the Bank of Industry, SMEDAN, and the Development Bank of Nigeria, SMEs still struggle with high commercial lending rates, often exceeding 30 percent, and short loan tenors of under three years. Consequently, about 79 percent of micro, small, and medium enterprises rely on personal savings for financing.

Analysts argue that Nigeria’s industrial strategy has historically favoured large firms, limiting broad-based industrialisation. Amaka Nwaokolo, Director of The FATE Institute, stressed that SMEs should be placed at the center of industrial policy, given their role as producers, suppliers, and service providers within the economy. She highlighted that Nigeria’s 41 million NMSMEs hold the key to industrial renewal and sustainable economic growth.

Moving forward, experts advocate for policies that provide long-term, affordable finance to SMEs, enabling investment in capacity expansion, technology adoption, and broader participation in industrial development. Without prioritising SMEs, Nigeria risks stifling job creation and economic diversification.