Credit Gap: Inside DBN’s N1tn Support for Small Businesses

As Nigeria seeks to diversify its economy, create jobs and promote inclusive growth, Development Bank of Nigeira expanding footprint offers a glimpse into how targeted financing can unlock enterprise potential across sectors and regions. Eromosele Abiodun and Nume Ekeghe writes.

As Nigeria grapples with the twin challenges of accelerating economic growth and creating jobs for its rapidly expanding population, one reality has become increasingly evident: sustainable development cannot be achieved without empowering the country’s millions of micro, small and medium enterprises (MSMEs).

Across the world, MSMEs serve as the backbone of economic activity, driving innovation, employment and wealth creation. In Nigeria, they account for more than 90 per cent of businesses and contribute significantly to national output. Yet, despite their importance, access to affordable financing remains one of the most stubborn constraints to their growth.

For decades, many Nigerian entrepreneurs have found themselves trapped in a vicious cycle. Without adequate collateral or formal credit histories, they struggle to secure loans from commercial banks. Without financing, expansion becomes difficult, productivity remains low and opportunities for job creation are lost.

It is against this backdrop that the Development Bank of Nigeria (DBN) has steadily emerged as one of the country’s most important development finance institutions. Through a combination of wholesale lending, credit guarantees and capacity-building initiatives, the bank has sought to close Nigeria’s vast financing gap and unlock the economic potential of small businesses.

The results have been significant. Since commencing operations in 2017, DBN has channelled more than N1 trillion to MSMEs through participating financial institutions, supported over one million end-beneficiary loans and contributed to the creation of more than 1.6 million jobs across the country.

At a time when economic diversification has become a national imperative, DBN’s expanding footprint offers compelling evidence of how targeted development finance can stimulate entrepreneurship, deepen financial inclusion and foster inclusive economic growth.

Tackling MSME Financing Challenge

Nigeria’s financing deficit remains one of the most significant obstacles to private-sector growth. While the country boasts a vibrant entrepreneurial population, access to long-term and affordable credit continues to lag behind demand.

For many MSMEs, borrowing from traditional financial institutions remains difficult due to high interest rates, stringent collateral requirements and perceived lending risks. This has left countless businesses unable to invest in productive assets, expand operations or scale their enterprises.

Recognising this challenge, DBN was established as a wholesale development finance institution with a mandate to increase access to finance for MSMEs and small corporates.

Unlike commercial banks, DBN does not lend directly to businesses. Instead, it operates through a network of participating financial institutions comprising deposit money banks, microfinance banks, merchant banks and other financial intermediaries.

This model allows the institution to leverage existing financial infrastructure while strengthening the broader lending ecosystem. By providing long-term funding to partner institutions, DBN enables them to extend credit to businesses that would otherwise remain underserved. Since commencing operations, the bank has disbursed more than N1 trillion through its participating financial institutions, supporting over one million loans to businesses across diverse sectors of the economy. These figures underscore both the scale of the financing challenge facing Nigeria and the importance of innovative interventions designed to bridge the credit gap.

Deepening Financial Inclusion

One of the most distinctive features of DBN’s operations has been its deliberate focus on inclusion. While access to finance remains a challenge across the board, women-owned businesses, youth-led enterprises and businesses operating in economically disadvantaged regions often face even greater barriers.

To address these disparities, DBN has embedded inclusion at the core of its development strategy. According to the bank’s impact records, women account for 77 per cent of beneficiaries reached through its lending programmes. This is particularly significant in a country where female entrepreneurs frequently encounter structural barriers to accessing formal finance.

The institution has also prioritised youth-led enterprises, with young entrepreneurs accounting for 28 per cent of beneficiaries supported through its financing interventions.

Beyond gender and youth inclusion, DBN has directed substantial resources towards underserved regions where access to capital remains limited and development indicators lag national averages.

More than N108 billion has been disbursed to over 132,000 MSMEs operating in states such as Borno, Adamawa, Katsina, Yobe and Zamfara.

These interventions go beyond simply providing loans. They represent strategic investments in economic resilience, helping businesses create opportunities in regions facing economic and social challenges.

By expanding access to finance in underserved communities, DBN is helping ensure that the benefits of economic growth are distributed more broadly across the country.

Financing Enterprise, Job Creation

Perhaps the most tangible measure of DBN’s impact lies in its contribution to employment generation. Nigeria continues to face significant labour market pressures, particularly among young people. Against this backdrop, MSMEs remain one of the most effective vehicles for job creation due to their labour-intensive nature and broad geographic spread.

Access to financing often determines whether a small business can survive, expand or hire additional workers. It enables entrepreneurs to purchase machinery, increase inventory, adopt new technologies and enter new markets.

The cumulative effect of thousands of such business decisions has translated into substantial economic activity. DBN estimates that its interventions have contributed to the creation of more than 1.6 million direct and indirect jobs since inception.

Behind these numbers are thousands of enterprises operating in sectors ranging from agriculture and manufacturing to trade, logistics, technology and services.

Each successful business expansion creates ripple effects throughout the economy, supporting suppliers, distributors, employees and local communities. In an economy where job creation remains a top national priority, the role of MSMEs as engines of employment has become increasingly important.

Building Stronger Businesses

While access to finance remains essential, capital alone is rarely sufficient to guarantee business success. Many MSMEs struggle with challenges related to financial management, governance, bookkeeping, strategic planning and operational efficiency. Recognising this reality, DBN has complemented its financing activities with extensive capacity-building programmes aimed at strengthening entrepreneurial capabilities.

To date, the institution has trained more than 52,000 MSMEs across Nigeria, equipping entrepreneurs with practical skills required to build sustainable businesses. The training programmes cover a broad range of areas including financial literacy, business planning, corporate governance and risk management. These initiatives are designed to improve business survival rates and enhance the capacity of enterprises to effectively utilise financing.

The bank has also extended technical assistance to more than 20 participating financial institutions, helping them improve their ability to serve the MSME segment.

To scale these interventions further, DBN developed a Learning Management System that provides broader access to training resources and business development tools.

This integrated approach reflects a growing understanding within development finance circles that sustainable enterprise growth requires both access to capital and access to knowledge.

Unlocking Credit Through Risk-Sharing Mechanisms

One of the most innovative aspects of DBN’s intervention strategy has been its use of credit guarantees to stimulate lending. In many cases, banks are reluctant to lend to small businesses because of concerns over repayment risks and inadequate collateral. This risk aversion has historically constrained credit flows to MSMEs despite their significant economic potential.

DBN’s credit guarantee programme seeks to address this challenge by sharing lending risks with participating financial institutions.

Through these guarantees, lenders gain greater confidence to extend financing to businesses that may not meet conventional lending criteria.

Since 2019, the institution has issued more than N512 billion in guarantees supporting over 100,000 MSMEs.

The programme has become a critical tool for expanding access to finance and encouraging private-sector participation in MSME lending.

By reducing risk exposure for lenders, DBN has helped unlock additional financing and improve credit availability across multiple sectors of the economy.

Strong Momentum in 2025 The bank’s development impact continued to accelerate in 2025, reflecting growing demand for its products and expanding partnerships across the financial sector. During the year, DBN disbursed more than N358 billion, supporting over 289,000 end-beneficiary loans nationwide. Women accounted for an impressive 81 per cent of beneficiaries reached during the year, while youths represented 17 per cent.

The institution also channelled N59 billion to more than 63,000 MSMEs operating in economically disadvantaged regions, reinforcing its commitment to inclusive development.

Capacity-building programmes remained a key component of its intervention strategy, with more than 48,000 MSMEs receiving training during the period.

These interventions contributed to the creation of over 376,000 jobs in 2025 alone, highlighting the powerful multiplier effect of development finance.

On the guarantee side, DBN issued more than N233 billion to support over 39,000 MSMEs, further expanding access to credit through risk-sharing arrangements. The figures underscore the institution’s growing relevance within Nigeria’s financial landscape.

Building World-Class Development Finance Institution

Beyond its operational achievements, DBN has continued to strengthen its institutional credibility through strong governance, prudent risk management and operational excellence.

The bank has maintained a “Low” and “Stable” supervisory rating from the Central Bank of Nigeria for four consecutive years, reflecting confidence in its governance and risk management frameworks. It has also secured triple-A ratings from Agusto & Co. and GCR, among the highest ratings attainable within the domestic financial market.

These ratings affirm the institution’s financial strength, sound corporate governance and ability to meet its obligations.

Beyond ratings, DBN has received several notable recognitions, including the World Bank’s Best Project in Nigeria award, accreditation as a Green Climate Fund Direct Access Entity and recognition from the SME Finance Forum.

Such recognitions have elevated the institution’s standing within both the Nigerian and international development finance community.

Charting Next Phase of Growth

Having established a strong national footprint, DBN is now positioning itself for a new phase of expansion. Its five-year strategic plan outlines ambitious targets aimed at significantly increasing both its financial reach and development impact.

The institution aims to reach more than two million MSMEs while increasing loans outstanding to N1 trillion and guarantees issued to N500 billion. It also plans to mobilise N1.3 trillion in additional debt and equity capital to support future growth.

The strategy places strong emphasis on inclusion, with targets to direct 40 per cent of loans to women-led enterprises, 30 per cent to youth-led businesses and 15 per cent to enterprises operating in underserved regions.

In addition, DBN intends to build a green financing portfolio valued between N75 billion and N100 billion, reflecting growing global emphasis on sustainable development and climate-resilient investments.

The institution also plans to train 500,000 MSMEs over the period and catalyse two million direct and indirect jobs. These aspirations demonstrate a clear commitment to expanding both financial inclusion and economic opportunity.

Catalyst for Inclusive Economic Growth

As Nigeria continues its search for sustainable pathways to economic transformation, the importance of development finance institutions is becoming increasingly evident.

The country’s aspirations for industrialisation, economic diversification and job creation cannot be achieved without a thriving MSME sector.

By bridging financing gaps, reducing lending risks and building entrepreneurial capacity, DBN has positioned itself as a critical enabler of enterprise development. With more than N1 trillion already deployed, over one million beneficiary loans supported and 1.6 million jobs created, the institution’s impact is becoming increasingly visible across the Nigerian economy.

The next chapter of DBN’s journey will be defined not merely by the volume of capital it deploys but by its ability to deepen inclusion, expand opportunities and empower a new generation of entrepreneurs.

For millions of Nigerian businesses seeking the capital to grow, innovate and create jobs, the Development Bank of Nigeria is increasingly proving that development finance can be a powerful catalyst for national economic transformation.