The Dutch Entrepreneurial Development Bank (FMO) and Nigeria’s First City Monument Bank (FCMB) have signed a $25 million NASIRA guarantee agreement.

The guarantee will enable FCMB to expand its funding to agricultural, youth, and women-owned small and medium-scale enterprises (SME) without requiring collateral.

Funded by the European Commission, NASIRA is one of FMO’s most innovative programs, encouraging local banks to extend their funding to small entrepreneurs without collateral.

Often, the FMO guarantee – that effectively replaces the collateral – is not fully utilised, demonstrating that the entrepreneurs, primarily women and young people, are not riskier than others.

Job creation in Nigeria, home to 220 million people and the largest population in Africa, is critical, the statement said.

The country faces severe economic challenges, including high unemployment and a significant 70 per cent 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.

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 and $10 million through FMO Investment Management.

The loan is dedicated to growing the existing FCMB loan portfolio of small and medium-sized entrepreneurs (SMEs).

Speaking during the signing ceremony at the side-lines of the 9th Nigeria EU Business Forum, the EU Ambassador to Nigeria and the Economic Community of West African States (ECOWAS), Samuela Isopi 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.”

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 the Sustainable Development Goal (SDG) two 2: zero hunger and food security.