Inject N2tr Into Credit Guarantee Company to Unlock Lending

The National Institute of Credit Administration (NICA) has called on the Federal Government to inject N2 trillion into the National Credit Guarantee Company (NCGC) as part of urgent measures to expand access to affordable credit and stimulate productive economic activity.

NICA’s Registrar and Chief Executive Officer, Prof. Chris Onalo, made the recommendation in a statement on Sunday while assessing the state of Nigeria’s credit economy.

Onalo said the recent recapitalisation of Nigerian banks would not automatically translate into economic growth unless deliberate measures were taken to ensure that increased banking capacity translates into greater lending to businesses and other productive sectors.

According to him, private-sector credit stood at about 28 per cent of Gross Domestic Product (GDP) as of June 2026, significantly below the 60 to 80 per cent average recorded in many emerging economies.

High Interest Rates Worsen Credit Access

The NICA chief executive said lending rates currently ranging between 32 and 35 per cent had made formal credit largely inaccessible to critical sectors, including manufacturing, agriculture, housing and education.

He also noted that banks had become increasingly cautious about lending despite improved liquidity following the recapitalisation exercise.

Onalo attributed the reluctance to lend to weaknesses in Nigeria’s credit infrastructure, including limited credit bureau coverage, weak collateral enforcement and delays in judicial recovery processes.

He warned that the widening credit gap was pushing millions of Nigerians towards informal lenders and digital loan platforms, potentially worsening household indebtedness and weakening the financial base of small businesses.

He described the situation as a “credit paradox”, in which funds are available within the banking system but are not circulating sufficiently through the productive economy.

N2tr Guarantee Fund

To address the challenge, Onalo urged the Federal Government to immediately capitalise the NCGC with N2 trillion.

He said such a broad-based guarantee scheme would reduce the risks associated with bank lending, unlock bank balance sheets and significantly increase credit flows to Micro, Small and Medium Enterprises (MSMEs) nationwide.

“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.

NICA Proposes Wider Credit Reforms

Beyond the proposed N2 trillion injection into the NCGC, NICA called for single-digit interest intervention funds for agriculture, manufacturing, housing and the creative economy through relevant government institutions.

Onalo also proposed the establishment of an Office of the National Chief Credit Officer to coordinate federal credit policies, intervention funds and guarantee programmes.

He recommended mandatory credit reporting by fintech companies, cooperatives and other lenders to strengthen the country’s credit infrastructure and provide a clearer picture of borrowers’ financial histories.

The NICA boss further called for the full digitisation of the National Collateral Registry, arguing that this would reduce lending risks and make it easier for businesses to use assets as collateral.

He also urged stronger regulation of digital lenders to protect borrowers from predatory interest rates and unethical debt recovery practices.

States Asked to Establish Credit Departments

Onalo proposed reforms to enable pension and insurance funds to invest more in corporate bonds and infrastructure debt, which he said could provide additional sources of long-term financing for businesses and infrastructure projects.

He further called on all 36 states to establish Credit Access Departments that would work with financial institutions and the NCGC to facilitate funding for grassroots enterprises.

The Federal Government established the NCGC in May 2025 with an initial capital of N100 billion to de-risk lending and expand access to finance for MSMEs, manufacturers, consumers and other businesses.

The company is expected to support economic growth, strengthen confidence in the financial system, promote industrialisation and improve access to finance for underserved groups.

The NCGC recently entered into a risk-sharing partnership with the Nigerian Consumer Credit Corporation (CREDICORP) aimed at expanding consumer credit through partial guarantees for participating financial institutions.

NICA’s latest proposal would represent a substantial increase in the government’s financial commitment to the credit guarantee system, with the institute arguing that stronger guarantees are needed to bridge the gap between banking-sector liquidity and access to affordable credit for businesses and households.