The federal government is set to establish the National Credit Guarantee Company (NCGC) by the second quarter of 2025, aiming to increase access to credit for individuals and critical sectors of the economy.¹ This initiative is part of President Bola Tinubu’s plan to improve the lives of Nigerians and make inflation more manageable.
What is the NCGC?
The NCGC is designed to provide credit guarantees to financial institutions and enterprises, reducing the risk associated with lending. This will enable financial institutions to expand their lending activities, benefiting micro, small, and medium enterprises (MSMEs), manufacturers, and consumers across Nigeria.
How will it work?
The NCGC will participate in the risks assumed by participating financial institutions (PFIs), guaranteeing loans or portfolios of loans provided to eligible beneficiaries. The company will also develop other de-risking solutions for bank loans and similar facilities.
Key benefits
- Increased access to credit: The NCGC will make it easier for individuals and businesses to access credit, driving economic growth and development.
- Reduced credit risk: By providing partial guarantees, the NCGC will reduce the credit risk for financial institutions, enabling them to lend more confidently.
- Better loan terms: Borrowers may benefit from better loan terms, such as lower interest rates and longer repayment periods.
Eligibility and application process
The NCGC will primarily focus on MSMEs across various sectors, including agriculture, manufacturing, and services. Individuals seeking consumer credit for essential needs can also benefit from the scheme. To apply, individuals and businesses must approach a bank or lender, which may then seek an NCGC-backed guarantee to support the loan.
Repayment terms and default
Repayment terms will vary based on loan type and lenders. In the event of a loan default, the PFIs will still bear part of the credit risk, and lenders will be required to implement recovery strategies.