The Dutch entrepreneurial development bank FMO and Nigeria’s First City Monument Bank (FCMB) have signed a $25 million NASIRA guarantee agreement.
This partnership will enable FCMB to expand its funding to agricultural, youth, and women-owned SMEs without requiring collateral, targeting clients typically considered too risky by banks.
Funded by the European Commission, NASIRA is one of FMO’s most innovative programs, encouraging local banks to extend funding to small entrepreneurs. Often, the FMO guarantee, which effectively replaces collateral, is not fully utilized, showing that these entrepreneurs, primarily women and young people, are not riskier than others.
Job creation in Nigeria, home to 220 million people and Africa’s largest population, is critical. The country faces severe economic challenges, including high unemployment and a significant 70% depreciation of its currency over the past year. Providing small loans to typically high-risk groups will enable them to start and expand their businesses, offering a means of income for themselves and their families.
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In addition to the $25 million NASIRA guarantee, FMO will support FCMB with a syndicated loan of $60 million: $20 million through FMO, $30 million through the European Financing Platform on behalf of BIO, DEG, EIB, FINNFUND, Proparco, and SWEDFUND, and $10 million through FMO Investment Management. The loan is dedicated to growing FCMB’s existing loan portfolio of small and medium-sized entrepreneurs (SMEs).
During the signing ceremony at the sidelines of the 9th Nigeria EU Business Forum, Myriam Ferran, Deputy Director General of the Directorate of International Partnerships (INTPA) of the European Commission, said, “We are very happy to see that the EU investment instruments, such as the European Fund for Sustainable Development (EFSD+) guarantees, have come to Nigeria to play a catalytic role in leveraging private sector investments for the benefit of the real sector, economic diversification, and employment creation, especially for youth and women.”
The transaction also includes a technical assistance (TA) program. Through this TA initiative, FCMB and FMO will select and support 15 scalable early-stage agri-tech businesses in Nigeria. Together, FMO and FCMB will identify 15 disruptive business models that address pressing problems in the agricultural sector, contributing to SDG2: zero hunger and food security.
