Nigeria Establishes N100 Billion National Credit Guarantee Company to Bolster MSME Financing
In a significant move to transform Nigeria’s credit market, the National Credit Guarantee Company Limited (NCGC) is poised to commence operations with an initial capital of ₦100 billion. The NCGC aims to unlock sustainable financing for underserved sectors, with a particular focus on Micro, Small, and Medium Enterprises (MSMEs).
During the Stakeholders’ Engagement on the Take-off of NCGC, Managing Director/CEO, Bonaventure Okhaimo, emphasized that the company was established to address a critical challenge in Nigeria’s credit market: the reluctance of lenders to extend credit due to perceived high risk.
Innovative Approach to Credit Guarantee:
“We do not lend directly; rather, we provide partial credit guarantees, covering a portion of potential loan defaults,” Okhaimo explained. “This innovative approach incentivizes financial institutions to extend more credit, confident in the knowledge that part of the risk is borne by the NCGC.”
Empowering MSMEs and Driving Economic Growth:
Given that MSMEs constitute over 90% of businesses in Nigeria yet face persistent credit constraints, the NCGC will serve as a vital loan guarantor, enabling banks and other financial institutions to lend with greater confidence.
The NCGC’s guarantees will reduce the perceived risk associated with lending, encouraging financial institutions to expand their credit portfolios and fostering greater financial inclusion.
Key Focus Areas:
• MSME financing and expansion
• Support for local manufacturers
• Consumer credit for economic stimulation
• Strengthening Participating Financial Institutions (PFIs)
By mitigating default risks and enhancing credit flow, the NCGC is expected to stimulate job creation, promote industrialization, and support inclusive economic growth throughout Nigeria.
Leveraging Data, Technology, and Partnerships:
Okhaimo emphasized that the NCGC will leverage data, technology, industry partnerships, and capacity-building initiatives to ensure efficient operations and minimize default risks. Public sensitization and advocacy for credit-friendly policies will also be integral to the company’s strategy.
A Long-Awaited Solution:
Dr. ‘Biodun Adedipe, founder of B. Adedipe Associates Limited, lauded the NCGC as a long-awaited solution to Nigeria’s systemic credit challenges in his keynote address.
“NCGC is the missing link that can drive inclusive growth and deepen industrial manufacturing,” Adedipe noted. “Its biggest risks are moral hazard and political interference, but with its defined structure and strong leadership, it can operate profitably and sustainably.”
He underscored that credit guarantees are essential for bridging the gap where lending opportunities exist, but borrowers lack sufficient collateral or fallback options.
Transforming Nigeria’s Credit Landscape:
For decades, the perception of high risk has significantly limited access to credit for Nigeria’s MSMEs, hindering their growth and innovation. With the NCGC now operational, financial institutions have a crucial safety net, potentially providing MSMEs with access to the affordable credit needed to scale their businesses.
If implemented effectively, this initiative has the potential to reshape Nigeria’s credit landscape, reduce reliance on informal lending practices, and accelerate the country’s progress toward inclusive economic growth.
Stay tuned FOR INFORMATION and HOW TO APPLYING FOR THIS OPPORTUNITY
