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FEATURE STORY July 7, 2021

Jumpstarting Small and Medium-Sized Businesses in West Africa  


Photo: ©Dasan Bobo/World Bank

Key Numbers:

  • $120 million from IDA Private Sector Window is helping financial institutions reach previously underserved and unbanked SMEs in fragile West African markets
  • 12,500 Small and Medium Sized Enterprises will be benefit from the first phase of the program  

Access to financial services remains one of the most acute constraints for small and medium-sized enterprises (SMEs) in West Africa. Due to their smaller size, limited experience, and undocumented performance, SMEs can be very risky to lenders—especially when they operate in fragile markets or more challenging environments. 

The International Financial Corporation’s (IFC) Small Loan Guarantee Program is an innovative mechanism to boost lending to SMEs. The program provides SMEs with access to financial services as well as risk-sharing support to encourage financial institutions in host countries to expand their lending portfolio, with a particular focus on the harder-to-reach smaller SMEs. The IDA Private Sector Window provides support to the program, in the form of a pooled first-loss guarantee of up to $120 million, allowing IFC to scale up its support in underserved and fragile markets to unbanked SMEs—especially female-owned SMEs or SMEs working in priority sectors like climate or agriculture.

With the support of the program, Union Bank in Nigeria is helping Nigerian businesses grow and create jobs. Although small businesses provide over 80 percent of Nigeria’s jobs, a recent World Bank survey found that only 15 percent of SMEs in the country reported having a bank loan or line of credit. It also found that more than half of the women-managed firms surveyed named access to finance as a major obstacle to growth.

The program will allow Union Bank to offer more products and services to women-owned businesses, especially in Nigeria’s conflict-affected Northern and Delta regions, where entrepreneurs face particularly difficult challenges accessing finance, and more than half the population is excluded from the financial system. 

“The IFC risk sharing facility is a welcome development which will further deepen our efforts to support Nigerian SMEs and women,” says Emeka Emuwa, the Chief Executive of Union Bank. “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.” 

IFC has already committed $172 million under the Small Loan Guarantee Program to 11 financial institutions, like Société Ivoirienne de Banque Côte d’Ivoire, one of the country’s largest financial institutions, and Atlantic Business International (ABI), one of the largest African banks with subsidiaries across eight countries including Benin, Burkina Faso, Côte d’Ivoire, Guinea, Mali, Niger, Senegal and Togo. The first phase of the program aims to reach a total of 25 banks in fragile markets, benefiting as many as 12,500 SMEs. 

With the support of the IDA Private Sector Window, IFC is ramping up investments in fragile markets in Africa—helping formalize and legitimize SMEs in emerging economies to create jobs and drive economic growth.