In the early 2000s, given Nigeria’s highly dependence on the oil economy and low levels of economic growth, the Government of Nigeria launched the National Economic Empowerment Development Strategy (NEEDS). This strategy aimed to help diversify the economy, boost non-energy exports, increase industrial capacity utilization, and improve agricultural productivity. To support this agenda, the World Bank launched the MSME Project (2005-2011), a $35 million, six year pilot programme. Specifically, the project aimed to improve performance and employment amongst MSMEs in selected non-oil industry sub-sectors and in three states of the country (Abia, Kaduna and Lagos) through increased private investment.
To achieve this, the project aimed to develop and strengthen the capacity of local intermediaries to deliver financial and non-financial services to MSMEs; and reduce selected investment climate barriers that constraint MSME performance.The key achievements of the programme in each component included:
- Access to business development services (BDS). The program supported BDS providers through supply side interventions to deepen the market for BDS service in four value chains: aquaculture, rice, palm oil and tourism. This component also included a BDS Fund which was not tied to any specific sector. Over 10,000 businesses were assisted with an independent survey showing that clients increased turnover by a far higher percentage than the control group.
- Access to financial services.The project helped to establish six new commercial micro finance institutions funded by local commercial banks. It mobilized 600,000 new savers and 200,000 borrowers. It helped a major commercial bank downsize its loan products. Independent surveys showed that beneficiaries were able to increase their incomes substantially.
- Improvements in the investment climate.The program addressed business registration, alternative dispute resolution (ADR), the legal and regulatory framework for secured lending (leasing, movable assets), and credit bureaus. A unified registration process involving the company registry, inland revenue and investment promotion agency was agreed and was computerized; two new ADR courts were created and two more were strengthened; the regulatory framework for credit bureaus was agreed by the Central Bank of Nigeria; and legislation to enable secured lending was drafted.
- Public Private Partnerships.The program supported the building of capacity amongst public agencies responsible for dealing with MSMEs and facilitated dialogue between them and the private sector that led to reforms in MSME policies.