A member of the World Bank Group, International Finance Corporation (IFC), has announced a $25 million local-currency investment to support the expansion of Union Bank Plc’s lending to women-led small and medium enterprises (SMEs) in Nigeria.
While SMEs account for over 80 percent of Nigeria’s employment, huge gaps still remain. A recent World Bank survey shows that only 15 percent of Nigerian small businesses reported securing bank loans or line of credit. The survey also pinpoints finance as a major challenge faced by more than half of the women-owned business in Nigeria.
IFC’s support will, therefore, ensure that Union Bank is able to offer more products and services to Nigerian women-managed businesses, especially in the country’s conflict-affected Northern and Delta regions, where SMEs face challenges accessing finance for business.
The risk-sharing facility from IFC will cover up to 50% of the risk of the bank’s loans to entrepreneurs, while helping Nigerian women-owned businesses scale and create employment.
According to Union Bank CEO, Emeka Emuwa, “Union Bank continues to develop sustainable products and services that promote enterprise and address poverty and financial inclusion. This is in line with our commitment to support the communities within which we operate. The IFC facility is a welcome development which will further deepen our efforts to support Nigerian SMEs and women.”
The initiative is part of IFC’s Small Loan Guarantee Program (SLGP), which aims to ease local-currency lending to SMEs in frontier markets. SLGP is backed by the International Development Association’s (IDA) Private Sector Window, which is providing the first-loss guarantee, allowing IFC to scale up its support to underserved and unbanked SMEs.
