The promise of credit, like infrastructure, is foundational to economic transformation. Yet, in Nigeria, as in many emerging economies, access to affordable finance remains one of the most significant bottlenecks for micro, small and medium-sized enterprises (MSMEs), the very engine of inclusive growth. For perspective, out of the over forty million MSMEs we have, only four per cent have access to formal credit (under two million MSMEs out of over forty million MSMEs). The remaining 96 per cent rely on informal credit such as friends, family, sharks and cooperatives.

These limit growth, and that is why the federal government’s new year announcement to establish a National Credit Guarantee Company (NCGC) that will be launched by June 2025 is more than a policy footnote: it is a structural inflection point that will benefit the majority of Nigerians, particularly traditionally under-served demographics such as women and youth. A well-run NCGC can be a game-changer for women and youth entrepreneurs, who face systemic collateral gaps despite high repayment rates.

Credit guarantees, when well-designed and credibly managed, serve as a quiet but powerful lever. They tilt risk appetites, unlock latent capital, and draw financial institutions into industries they might otherwise ignore. However, credit guarantees are not silver bullets.

History, from Nairobi to Niamey, is replete with schemes that faltered, bogged down by weak risk governance, political interference, or overengineered complexity. Countries like India and Chile have also used guarantee mechanisms to catalyze MSME lending with varied success, hinging on the very factors Nigeria must now address.

What will make Nigeria’s approach different?
There are three conditions I believe are essential—not as abstract ideals, but drawn from lived experience implementing and refining credit guarantee systems across Africa.

First, institutional clarity must trump ambition. A guarantee company is not a lender. Its core strength lies in risk calibration—knowing what to guarantee, how much, and on what terms. That requires not just capital, but a culture of disciplined risk assessment, operational independence, and strategic humility. These traits are not built overnight—they are embedded through governance, systems, and incentives.

Second, local markets must lead design. Templates don’t travel well. Credit behaviours in Aba differ from Accra. Guarantee products must reflect the risk realities of Nigeria’s financial ecosystem—its informality, regulatory dynamics, and entrepreneurial culture.Technology can help, but it must serve context, not override it. We need systems that enable quick decisions, not just dashboards.

Third, trust is the currency. For financial institutions to rely on a guarantee, the scheme must be known to honour claims, maintain transparency, and remain apolitical. For enterprises, it must translate into real access—shorter turnaround times, lower collateral requirements, and tailored financial products. And for government and donors, it must report on impact, not just volumes, but outcomes.

When well executed, guarantee schemes multiply their effect. They don’t replace banks but nudge them. They don’t subsidise failure; they de-risk potential. And they don’t just improve access, they rewire incentives in the financial system toward inclusion.

I’ve seen this work in practice, in Rwanda, Ghana, Mozambique, Nigeria and most recently, Moldova, where small, early wins built institutional credibility and investor confidence. Nigeria now stands on the cusp of such a moment. But what follows the announcement must be more than infrastructure. It must be institutional readiness.

This isn’t just another policy rollout—it’s a chance to prove that Nigeria can build lasting institutions that deliver for its people.The NCGC can be a turning point, not just for finance, but for trust in how government, markets, and people solve problems together. Let’s get it right.

Mohammed, is a financial risk and development finance specialist. She has advised on the design and operationalisation of credit guarantee funds across Africa and Eastern Europe, funded by various bilateral donors.