6 Non-bank Financial Institutions That Help SMEs In Nigeria

Non-bank Financial Institutions That Help SMEs In Nigeria: Many financial institutions are directly or indirectly involved in the development and growth of entrepenship in Nigeria. Several institutions were established to provide basic financial assistance to Small and Medium-sized Enterprises (SMEs) to help entrepreneurs meet their business financial needs.

On the other hand, there are Non-bank Financial institutions that are also established in Nigeria to provide bank-like financial services to SMEs with the sole aim to improve entrepenship growth in Nigeria.

Today, we will be discussing the top 6 Non-bank Financial Institutions that help SMEs in Nigeria in one way or the other.

Before we list the Non-bank Financial Institutions that render help to SMEs in Nigeria, let's quickly take a look at the roles of Non-bank institutions to SMEs and how they help SMEs in Nigeria.

Roles Of Non-bank Financial Institutions to SMEs

Here are a few roles of Non-bank  to SMEs in Nigeria:

• Provide advice and relevant information on funding business projects.

• Facilitate the attraction of foreign investors, overseas capital, and technical know-how.

• Provide bank-like financial services in terms of short and long-term loans to SMEs.

• Serve as a link in the process of important or exportation of goods and services.

How Non-bank Financial Institutions Help SMEs in Nigeria

Non-bank financial institutions (NBFIs) play a crucial role in supporting small and medium-sized enterprises (SMEs) in Nigeria by providing them with various financial services and products.

Here are some ways in which NBFIs help SMEs in Nigeria:

• Access to Finance: SMEs often face challenges in accessing finance from traditional banks due to a lack of collateral or credit history. NBFIs offer alternative financing options such as microcredit, trade financing, invoice financing, and supply chain financing, which are tailored to the needs of SMEs. These financing options help SMEs to access the capital they need to invest in their businesses, expand their operations, and meet their working capital requirements.

• Business Advisory Services: NBFIs provide business advisory services to SMEs, including financial management, accounting, and business planning. These services help SMEs improve their financial literacy, manage their cash flow effectively, and make informed financial decisions, which are critical for their business growth and sustainability.

• Risk Management Solutions: NBFIs in Nigeria offer risk management solutions such as credit risk assessment, risk profiling, and risk mitigation strategies to SMEs. These solutions help SMEs to manage risks associated with their business operations, including credit risks, market risks, and operational risks, thereby safeguarding their financial stability and enhancing their access to finance.

• Financial Inclusion: NBFIs play a significant role in promoting financial inclusion by extending financial services to SMEs in remote and underserved areas of Nigeria where traditional banks have limited presence. Through innovative technology-driven solutions such as mobile banking, agent banking, and digital wallets, NBFIs enable SMEs to access financial services conveniently and cost-effectively, thereby improving their financial inclusion and economic empowerment.

• Capacity Building and Training: NBFIs provide capacity building and training programs to SMEs, including financial literacy training, business management training, and entrepreneurship development programs. These programs equip SMEs with the necessary skills and knowledge to effectively manage their businesses, enhance their competitiveness, and seize growth opportunities.

• Alternative Investment Opportunities: NBFIs in Nigeria also offer alternative investment opportunities to SMEs, such as venture capital, private equity, and angel investment. These investment options provide SMEs with access to equity capital, mentorship, and business networks, which can help them scale up their businesses and create new growth opportunities.

Now that you know the important roles of Non-bank Financial Institutions and how they help the SMEs in Nigeria, let's list out these establishments that provide such services.

Top 6 Non-bank Financial Institutions That Help SMEs In Nigeria

The following is the list of top Non-bank Financial Institutions that helps SMEs in Nigeria:

1. Insurance Companies

In rendering financial assistance to entrepreneurs, insurance Companies grant both short and long-term loans to enterprises for the purchase of fixed assets.

Insurance companies, apart from granting loans to entrepreneurs, also lecture them about risk. They reached how to many, divert, and avoid risks in their businesses. They also help to ensure basic risks that can affect SMEs are insured.

2. Small Scale Industries Credit Scheme ( SSCIS)

This agency was established in 1971 to encourage a new class of educated and technically qualified entrepreneurs to set up modern small-scale enterprises.

The federal government introduced the scheme as a revolving grant to assist small-scale entrepreneurs in meeting their credit needs on relatively more liberal conditions than in private lending institutions such as commercial banks and other financial institutions.

3. Small Business Investment Corporation

This is an American privately owned financial corporation that is licensed, regulated, and promoted by small business administration. This agency provides financial assistance to small businesses and also provides consulting services to small and large businesses.

4. National Economic Reconstruction Fund (NERFUND)

The NERFUND was established in 1990 by the federal government to bridge the resource gap among small-scale entrepreneurs who were finding it difficult to obtain loans to finance investment and working capital to run their businesses. They simply help small enterprises to have access to money to finance their businesses.

5. Industrial Development Centres

The center was to provide technical, managerial, and accounting assistance to SMEs in woodworking, metalworking, automobile repair, textile, and leatherworking.

6. National Directorate of Employment

The National Directorate of Employment was established to design and implement programs to combat mass unemployment. This program helps to educate unemployed individuals to identify and grab business opportunities. 

The NDE does this by introducing;

• National open apprenticeship scheme, and

• Job creation loan guarantee scheme.

Both schemes were created to fight unemployment and introduce business to people.

Other Non-bank Financial Institutions That Help SMEs In Nigeria

Other agencies that were established to promote the existence of small and medium-scale enterprises are;

• Nigeria Export Promotion Council.

• Industrial Training Fund (ITF).

• Raw Materials Research and Development Council (RMRDC).

• Center for Industry Research Development (CIRD).


Non-bank financial institutions (NBFIs) play important role in supporting SMEs in Nigeria by providing them with access to finance, business advisory services, risk management solutions, promoting financial inclusion, capacity building and training, and alternative investment opportunities. These services and products offered by NBFIs help Small and Medium-sized Enterprises overcome financial problems, build their capacity, and drive economic growth in Nigeria.
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