The Challenge

Small and medium-sized enterprises (SMEs) account for 84% of employment in Nigeria, thereby playing a critical role in the country’s economic development. However, a recent World Bank survey found that only 15 percent of SMEs reported having a bank loan or a line of credit, and half of the WSMEs surveyed named lack of access to finance as a major impediment to their growth.

Joining Forces

We-Fi and IFC are enabling the increase in SME and WSME lending in Nigeria through Union Bank PLC, a leading financial institution for the SME segment. Under the program, IFC provides a risk-sharing facility (RSF) that will cover 50 percent of the potential losses on a portfolio of SMEs, and We-Fi provides a performance-based incentive (PBI) to stimulate the bank to scale up its lending to WSMEs.

With this support, Union Bank plans to offer more demand-driven products and services to SMEs, 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. We-Fi’s incentive aims to encourage more lending to women entrepreneurs in particular, including WSMEs in the underserved Northern and Delta regions of Nigeria and will be paid out once the agreed gender targets are met.


The project provides Union Bank with an efficient risk mitigation tool to increase lending to SMEs, and WSMEs in particular. It is expected to support expanding its very small, small, and medium-sized enterprise loan portfolio by about 75% (compared to  2018), as well as increasing its loan portfolio to WSMEs and very small enterprises by more than 150%  by 2023.

Overall, the bank is expected to disburse close to 35% of loans to WSMEs, compared to the market’s average of 16-19%. At least 70% of the project portfolio will be in the underserved Northern and Delta regions.

The sustainable growth of the Bank’s portfolio is expected to encourage other financial institutions to offer dedicated SME banking solutions by demonstrating that, when approached with the right tools and processes, SME finance in the market can be commercially viable.

More Information: