SMEDAN launches N500 million interest-free fund to boost small businesses – THIS UPDATE

By Victor Osula, Abuja

The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has unveiled a $500 million interest-free revolving fund aimed at expanding access to affordable financing for micro, small and medium enterprises (MSMEs).

The agency’s director general, Charles Odii, announced the initiative, known as the Grow Fund for Small Businesses in Nigeria, during a meeting with traders, saying the intervention was designed to address one of the biggest challenges facing Nigerian entrepreneurs: limited access to affordable credit.

According to Odii, the agency’s decision followed direct consultations with market participants to better understand the realities facing small business owners.

“Today we visited traders in one of the markets to interact with them directly because it is not enough to sit in offices and make policies without understanding their realities.

“Many of the challenges raised border on financing, which is why we are launching the Grow Fund for Small Businesses in Nigeria,” he said.

Access to affordable finance remains a major constraint to the growth of Nigeria’s SME sector, with many entrepreneurs unable to obtain conventional bank loans due to high interest rates, collateral requirements and other stringent lending conditions.

The launch of the Grow Fund is part of SMEDAN’s broader strategy to support small businesses, stimulate entrepreneurship, create jobs and enhance the MSME sector’s contribution to Nigeria’s economic growth.

Odii explained that the interest-free loans would enable beneficiaries to increase their working capital, purchase business equipment and tools, and secure adequate workspaces needed to expand their operations.

He revealed that unlike previous intervention programs where funds were disbursed directly to individuals, SMEDAN would channel loans through registered businesses and trade associations.

“We’re not giving the money directly to individuals. We’re giving it to associations that understand their members and can manage the funds responsibly,” he said.

The SMEDAN head noted that the association-led model was deliberately designed to strengthen accountability, improve loan recovery and ensure that more entrepreneurs benefit from the revolving fund over time.

The agency said beneficiaries’ refunds would be recycled to finance additional businesses, creating a sustainable financing mechanism capable of reaching thousands of MSMEs across the country.

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