The Arab Bank for Economic Development in Africa (BADEA) has entered into a €40 million (approximately N60 billion) line of credit agreement with the Development Bank of Nigeria (DBN) to expand access to long-term financing for micro, small, and medium-sized enterprises (MSMEs) across the country. The deal was finalized on the sidelines of the International Monetary Fund (IMF) and World Bank Spring Meetings in Washington, D.C., and aims to address the persistent shortage of affordable, long-term funding—often referred to as 'patient capital'—that continues to hinder business growth in Nigeria.
Funds to Target Key Sectors
Under the arrangement, the funds will be disbursed through DBN's network of participating financial institutions, targeting critical sectors such as agriculture, manufacturing, healthcare, and information technology. BADEA President Abdullah Almusaibeeh stated that the initiative underscores the bank's commitment to inclusive, private sector-driven growth across Africa. He noted that strengthening DBN's ability to support MSMEs, particularly those led by women and young entrepreneurs, would stimulate investment and drive sustainable economic transformation.
Emphasis on Financial Inclusion
A key component of the facility is its focus on expanding financial inclusion. A substantial share of the funding is reserved for businesses owned or managed by women and youth—groups that often face significant challenges in accessing formal credit in Nigeria. DBN's Managing Director and Chief Executive Officer, Tony Okpanachi, described the agreement as a major step toward boosting job creation and industrial development. According to him, the funding will enhance DBN's capacity to provide accessible financing, promote economic diversification, and support long-term growth.
Bridging Nigeria's MSME Funding Gap
MSMEs account for more than 90 percent of businesses in Nigeria and contribute nearly half of the country's gross domestic product. However, the sector is constrained by an estimated N13 trillion financing gap, worsened by high lending rates linked to the Central Bank of Nigeria's tight monetary stance aimed at curbing inflation. Established in 2017, DBN operates as a wholesale development finance institution, providing large-scale funding to commercial and microfinance banks for onward lending to small businesses. The new credit facility is expected to strengthen its funding base as the federal government intensifies efforts to boost non-oil exports.
Headquartered in Khartoum, Sudan, BADEA is a multilateral development finance institution backed by 18 member countries of the Arab League. The partnership with DBN aligns with its BADEA 2030 Strategy, which seeks to deepen economic cooperation between Arab nations and Africa while promoting private sector development and infrastructure growth across the continent.
CAC Offers Free Registration for SMEs
Meanwhile, the Corporate Affairs Commission (CAC) announced a fresh initiative aimed at easing the burden on small business owners across Nigeria. Under the new programme, 3,500 small enterprises will enjoy free business name registration, covering all 36 states and the Federal Capital Territory. According to the CAC, the intervention is designed to lower the cost of formalising businesses and encourage more entrepreneurs to operate within the formal economy.
