A report by the Alliance for Economic Research and Ethics (AERE), led by former NACCIMA National President Hon. Dele Oye, has exposed systemic flaws in Nigeria's capital allocation framework, blaming it for stifling growth in the small business sector. The analysis reveals that despite interventions like the World Bank's $500 million FINCLUDE programme, aimed at mobilising $1.89 billion for MSMEs, the financial system remains structurally misaligned with national development needs. MSMEs account for 96 per cent of businesses, 48 per cent of GDP, and 84 per cent of private sector employment, yet fewer than one in 20 has access to formal bank credit.
The report attributes the crisis to macroeconomic conditions, including a Monetary Policy Rate of 26.50 per cent and inflation at 15.69 per cent as of April 2026, which have made productive lending economically unattractive. With risk-free returns from central bank instruments and sovereign debt yielding between 16 per cent and 22 per cent, banks are incentivised to avoid lending to the real economy. The AERE described this as "not banker greed. This is banker arithmetic," arguing that financial actors are responding rationally to distorted incentives.
Government borrowing is also cited as a key factor crowding out private sector credit demand, effectively pricing MSMEs out of the market. Development finance institutions (DFIs) are said to be overwhelmed, holding just over N8 trillion in assets against an estimated N130 trillion financing gap for MSMEs—a shortfall characterised as a "funding abyss." The report calls for fiscal discipline, restructuring of CBN liquidity incentives, DFI recapitalisation, and greater formalisation of MSMEs. Without structural reform, it warns, financial inclusion will remain a policy aspiration rather than an economic reality.
Hon. Dele Oye chairs a report exposing Nigeria's financial system as rigged against MSMEs, even as he once led the same chamber groups that failed to shift this reality. The system rewards banks for avoiding productive lending, and with treasury bills yielding up to 22 per cent, no amount of speeches can override that math. Millions of small business owners are locked out not by lack of effort but by design. Until the incentives are flipped, inclusion remains a slogan, not a strategy.
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