CBN Moves to Recapitalise DFIs as Nigeria’s MSME Financing Gap Hits N130tn

Nigeria’s small business sector could be on the brink of a major funding shake-up, as the Central Bank of Nigeria (CBN) signals plans to overhaul and recapitalise key financial institutions struggling to meet demand.

Speaking at the World Bank’s Nigeria Development Update in Abuja, Muhammad Abdullahi said the apex bank is reviewing the structure of Development Finance Institutions (DFIs) to better support micro, small, and medium-sized enterprises (MSMEs).

The move follows a stark internal assessment by the Central Bank of Nigeria, which found that existing DFIs lack the financial strength needed to address the country’s massive credit shortfall. According to Abdullahi, the combined asset base of DFIs stands at just over N8 trillion — far below the estimated N130 trillion required to adequately fund MSMEs.

That gap, he noted, continues to limit the growth potential of small businesses, which are widely regarded as the backbone of Nigeria’s economy. The proposed recapitalisation is expected to strengthen lending capacity and improve access to long-term financing.

Alongside the CBN’s plans, the Federal Government is also exploring new ways to mobilise domestic capital and reduce reliance on borrowing. Wale Edun revealed that authorities are working on a mass savings scheme designed to encourage investment across all income levels.

The initiative would allow Nigerians to earn returns from investments in major companies, including refineries and other firms listed on the stock exchange, while simultaneously supporting national economic growth.

Edun said the strategy forms part of broader fiscal reforms aimed at improving revenue generation, strengthening expenditure control, and attracting private sector participation in funding development.

Together, the reforms signal a shift toward more sustainable financing models, as policymakers seek to close Nigeria’s funding gap and unlock the full potential of its MSME sector.