The Dutch entrepreneurial development bank FMO and Nigeria’s First City Monument Bank (FCMB) have entered into a $25 million NASIRA guarantee agreement. This initiative aims to facilitate FCMB in expanding its financing options for agricultural, youth, and women-owned SMEs, bypassing the need for collateral. The agreement was formalized during the 9th Nigeria EU Business Forum in Abuja, supported by funding from the European Commission. NASIRA, a pioneering program by FMO, encourages local banks to support small entrepreneurs by mitigating the need for collateral.
According to the statement, the FMO guarantee, which serves as a substitute for collateral, is frequently underutilized. This highlights that the entrepreneurs benefiting from this support, particularly women and young people, are not inherently riskier than other borrower groups.
According to the statement issued by FMO “Job creation in Nigeria, home to 220 million people and the largest population in Africa is critical. The country faces severe economic challenges, including high unemployment and a significant 70 percent 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 USD 25 million NASIRA guarantee, FMO will support FCMB with a syndicated loan of USD 60 million: USD 20 million through FMO, USD 30 million through the European Financing Platform on behalf of BIO, DEG, EIB, FINNFUND, Proparco, and SWEDFUND, and USD 10 million through FMO Investment Management. The loan is dedicated to growing the existing FCMB loan portfolio of small and medium-sized entrepreneurs (SMEs).”
Addressing attendees at the signing ceremony held during the sidelines of the 9th Nigeria EU Business Forum, Myriam Ferran, Deputy Director General of the Directorate of International Partnerships (INTPA) at the European Commission, stated: “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 contains 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, the statement said.