CBN Plans DFI Recapitalisation to Bridge MSME Credit Gap

The Central Bank of Nigeria (CBN) has announced plans to recapitalise and restructure development finance institutions (DFIs) to address a widening funding gap for micro, small and medium enterprises (MSMEs).

Deputy Governor for Economic Policy, Muhammad Sani Abdullahi, disclosed this during the launch of the World Bank’s Nigeria Development Update in Abuja.

Abdullahi said a recent review showed DFIs’ current asset base of N8 trillion is far below the N130 trillion needed to meet MSME credit demand.

“The only way to do it is not only through public sector injecting capital in these agencies, but it’s also to make them bankable, to make them investable,” he explained.

He noted that the CBN is working with the Ministry of Finance to overhaul DFIs’ structure, improve incentives, and strengthen risk appetite.

“We’re looking at it structurally to see how more market fundamentals can go into these things because the way it’s been done in the past has not worked,” Abdullahi said.

The reforms are linked to recent banking sector recapitalisation, which raised N4.65 trillion. Abdullahi said this would boost lending capacity across the system.

“We envisage going forward that there’ll be a lot more credit that’s available,” he added, stressing that banks must conduct their own risk assessments rather than follow directed lending.

He acknowledged that lending to the real sector remains a structural challenge. “Access to finance has always been one of the longstanding constraints for businesses, particularly MSMEs,” he said, adding that combining stronger commercial banks with reformed DFIs could unlock credit flows.

Abdullahi pointed to resilience in business activity despite high borrowing costs, noting that the Purchasing Managers’ Index remains above 50 points, signalling expansion. He expressed optimism that reforms would gradually improve access to finance and support growth.