The Central Bank of Nigeria (CBN) has announced plans to recapitalise and restructure Development Finance Institutions (DFIs) as part of efforts to address the funding gap affecting micro, small, and medium-sized enterprises (MSMEs) in the country.
Speaking at the launch of the Nigeria Development Update by the World Bank in Abuja, CBN Deputy Governor for Economic Policy, Muhammad Abdullahi, revealed that the total asset base of DFIs in Nigeria stands at just over ₦8 trillion, far below the estimated ₦130 trillion required to effectively support MSMEs.
He explained that addressing the gap would require more than capital injections, stressing the need to make DFIs more bankable and attractive to investors through structural reforms.
According to Abdullahi, the CBN, in collaboration with the Ministry of Finance, is reviewing the operational framework of DFIs to improve efficiency, strengthen capital levels, and enhance their risk appetite.
He added that the reforms would introduce stronger market-driven principles, noting that previous approaches have not delivered the desired results in supporting the real sector.
The deputy governor also highlighted that with the recent banking sector recapitalisation, which saw banks raise about ₦4.6 trillion, there is now greater capacity for increased lending to businesses.
However, he cautioned against directing banks to lend administratively, emphasising that financial institutions must independently assess risks before extending credit.
The CBN expressed optimism that with stronger banks and reformed DFIs, access to finance for businesses—particularly MSMEs—will improve significantly, boosting economic growth and productivity.
