The National Institute of Credit Administration (NICA) has called on the Federal Government to provide N2 trillion in capital for the National Credit Guarantee Company (NCGC), saying the move would help reduce lending risks and improve access to affordable financing for Micro, Small and Medium Enterprises (MSMEs) and other productive sectors.

NICA Registrar and Chief Executive Officer, Prof. Chris Onalo, made the proposal in a statement issued on Sunday. He argued that bank recapitalisation by itself would not be sufficient to drive economic growth without a corresponding increase in credit available to businesses.

Onalo said private-sector credit accounted for 28 per cent of Gross Domestic Product as of June 2026, significantly below the 60 to 80 per cent average recorded across emerging economies.

He noted that lending rates ranging between 32 and 35 per cent had placed formal credit beyond the reach of several critical sectors, including manufacturing, agriculture, housing and education.

According to him, banks’ reluctance to extend more credit is also linked to weaknesses in the country’s credit infrastructure, limited coverage by credit bureaus, difficulties with collateral enforcement and delays in judicial recovery processes.

He warned that the widening credit gap was driving more Nigerians towards informal lenders and digital loan platforms, a development that could increase household debt while putting additional pressure on small businesses.

Onalo said capitalising the NCGC with N2 trillion would help reduce the risks associated with lending and encourage banks to release more funds to MSMEs.

“This broad-based guarantee will de-risk lending, unlock bank balance sheets, and upscale credit to MSMEs nationwide. It is the bridge between strong banks and a strong economy,” he said.

Beyond the proposed NCGC capitalisation, Onalo advocated single-digit intervention funds for agriculture, manufacturing, housing and the creative economy.

He also proposed the creation of an Office of the National Chief Credit Officer to coordinate federal credit policies and guarantee programmes.

As part of measures to strengthen Nigeria’s credit ecosystem, Onalo recommended that fintech companies, cooperatives and other lenders be required to report credit information.

He further called for the complete digitisation of the National Collateral Registry and tighter regulation of digital lending platforms.

The NICA chief also urged all 36 states to establish Credit Access Departments. The departments, he said, should collaborate with financial institutions and the NCGC to improve access to funding for businesses operating at the grassroots.

The NCGC was established by President Bola Tinubu in May 2025 with an initial capital of N100 billion. Its mandate is to expand access to finance for MSMEs, manufacturers, small corporates and other businesses.

The company has also recently entered into a partnership with the Nigerian Consumer Credit Corporation (CREDICORP) through a risk-sharing arrangement. Under the arrangement, the NCGC provides partial credit guarantees for loans issued through participating financial institutions working with CREDICORP.

NICA said a stronger credit guarantee framework would increase banks’ confidence in lending and enable more MSMEs to obtain the financing required to expand their businesses.

Source: msme Africa online