Nigeria will create a national credit guarantee company in May 2025 to improve lending to businesses and individuals. This was announced on 1 January by President Bola Tinubu. The initiative is part of wider economic reforms aimed at widening access to credit and stimulating economic growth.
In May, Nigeria will set up a national credit guarantee company to lend to businesses and individuals. This was one of the announcements in President Bola Tinubu’s address to the nation on January 1 2025. The company will work with key government agencies such as the Bank of Industry, the Nigerian Consumer Credit Corporation, the Nigerian Sovereign Investment Agency and the Ministry of Finance.
“ The National Credit Guarantee Company will operate differently from financial institutions or private sector creditors using the lens of credit or risk sharing instruments. So what I mean by that is by risk sharing, the national company is going to guarantee a certain amount, a certain percentage of the credit that they are given, the financing that they have access for private sector players based on the arrangement for the organization to be beneficiaries of the credit.”
Basil Abia, Policy analyst – Nigeria
Implementation of the programme has been planned in stages, starting with federal civil servants before the general public. Despite the significant monetary tightening initiated by the Central Bank of Nigeria (CBN) since 2023, the banking sector continues to post some of the highest sectoral growth in the country. According to figures published by the Nigerian Bureau of Statistics (NBS) for the first quarter of 2024, banks and insurance companies were particularly dynamic, with year-on-year growth of 31.2%.
“Unfortunately, if we’re looking at the data from the IMF based off of the lending time cycle from 2015 till 2023 January 23, they had a loan default rate of about 76%. So we have already had something similar to this in the past and it hasn’t been successful.”
Basil Abia, Policy analyst – Nigeria
While the performance of the banking sector continues to improve, the share of loans in banks’ balance sheets remains low, representing only 30% of total assets in 2023, according to the IMF. Bola Tinubu, who took office in May 2023, campaigned on economic reforms, in particular widening access to credit to stimulate economic growth.
