(Ecofin Agency) - Since taking office, Nigerian President Bola Tinubu has launched several reforms to revive the economy. One key initiative focuses on financing small and medium-sized enterprises (SMEs), which make up 80% of jobs in the country, to reduce poverty. According to the African Development Bank (AfDB), Nigeria’s multidimensional poverty rate stood at 63% in 2022.

The Nigerian federal government will provide 50 billion naira (about $30.3 million) to support SMEs, according to information reported on September 8 by local media outlet News Digest. The initiative is part of the government’s plan to stimulate economic growth and combat poverty.

As part of the initiative, 1 million small businesses, also referred to as "NANO businesses," will each receive 50,000 naira (around $30). This funding targets businesses with at least three employees and annual revenue below 3 million naira.

This comes as many Nigerian SMEs face significant financial challenges. According to the European Investment Bank (EIB), which cited data from the Nigerian Development Bank, only 5% of Nigeria's 37 million small businesses, which contribute to 50% of the nation's GDP, have access to formal credit.

In 2023, roughly 10 million small businesses, affiliated with the Association of Small Business Owners of Nigeria (ASBON), closed down, with lack of financing being one of the main reasons. This figure represents 25% of registered SMEs, according to The Punch.

To address this issue, the Nigerian government created the Development Bank of Nigeria to provide financing to SMEs. In 2023, it also announced a $261 million support package for the manufacturing and small business sectors.