By Seun Ibiyemi
The Central Bank of Nigeria (CBN) has unveiled plans to recapitalise and restructure development finance institutions (DFIs) in a bid to address the widening financing gap facing micro, small and medium enterprises (MSMEs) in the country.
The Deputy Governor for Economic Policy at the CBN, Muhammad Sani Abdullahi, disclosed this during a panel session at the launch of the Nigeria Development Update by the World Bank in Abuja on Tuesday.
Abdullahi said a recent review conducted by the apex bank revealed that the current size of DFIs is significantly inadequate when compared to the credit needs of businesses.
According to him, Nigeria’s DFIs have a combined asset base of just over N8 trillion, far below the estimated N130 trillion required to adequately support MSMEs.
“We did a review last year around the whole development finance space… what we have is a total asset base of over N8 trillion, whereas what is really required… is over N130 trillion,” he said.
He stressed that bridging the gap would require more than just public sector capital injections, noting that DFIs must be repositioned to attract private investment.
“The only way to do it is not only through public sector injecting capital… but it’s also to make them bankable, to make them investable,” Abdullahi added.
The CBN, he said, is collaborating with the Ministry of Finance to overhaul the structure of DFIs by correcting incentives, improving risk appetite, and strengthening capital bases.
He explained that the planned reforms would introduce stronger market-based principles, noting that previous approaches had not delivered the desired outcomes.
“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,” he stated.
Abdullahi linked the reform efforts to the recent banking sector recapitalisation, which saw lenders raise about N4.6 trillion, noting that the development would boost lending capacity across the financial system.
He, however, emphasised that the apex bank would avoid administratively directing credit to specific sectors, insisting that banks must independently assess lending risks.
“What we do want to shy away from very strongly is this administratively directed credit… banks have to do their own risk assessments,” he said.
The Deputy Governor reiterated that access to finance remains a longstanding structural challenge for Nigeria’s economy, particularly for MSMEs seeking affordable credit.
He expressed optimism that a combination of stronger commercial banks and reformed DFIs would unlock increased credit flows to the real sector.
Abdullahi also highlighted resilience in business activity despite high borrowing costs, noting that the Purchasing Managers’ Index has remained above the 50-point threshold, indicating continued expansion.
He said ongoing reforms are expected to gradually improve access to finance and support sustainable economic growth.
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