Access to Debt Financing for SMEs - Looking Back at the Achievements of the 8th Senate of Nigeria

Photo: 8th Senate of Nigeria
28-year old Companies and Allied Matters Act was amended by the The 8th Senate of Nigeria with changes aimed at encouraging investment in small businesses, lowering costs and easing regulatory burdens.
7 June 2019

The Credit Reporting Act 2017  

Visit the 8th Nigeria Senate Chatbot to learn more.

Excerpted from sections of the 8th Senate 3-Year Report: Reviving The Economy, Creating Opportunities For Nigerians


The 8th Senate at its inception focused its legislative reforms on reducing regulatory burdens for and easing access to capital for Micro, Small and Medium Enterprises (MSMEs). After the 8th Senate’s success in getting the Secured Transactions in Movable Assets Act 2017 signed into law.

[Read: Easing Access to Finance for Nigerians - Looking Back at the Achievements of Nigeria’s 8th Senate: The Secured Transactions in Movable Assets Act 2017]

The 28-year old Companies and Allied Matters Act was amended by the Senate with changes aimed at encouraging investment in small businesses, lowering costs and easing regulatory burdens.


96% of Nigerian businesses are Small, Medium-Sized Enterprises (SMEs). Over 57 million Nigerians are employed in micro and small businesses with, on average, only 1.9 employees, and the vast majority of these firms are informal enterprises. Such enterprises account for close to half of Nigeria’s GDP. SMEs in Nigeria face some basic constraints such as under-developed infrastructure and a poor investment climate… One of the main constraints is the lack of access to debt financing in Nigeria, and the high risk levels associated with lending in Nigeria caused by the high rate of bad debt.  It is already acknowledged globally that by facilitating the exchange of information, credit registries and bureaus help creditors to win new borrowers and to price loans correctly. A 2008 World Bank survey of 91 banks in 45 economies documented that the availability of credit information is a critical factor in access to finance for MSMEs, particularly in developing economies where 70% of banks reported that the presence of a credit bureau facilitates lending to this category of borrowers.

The Credit Reporting Act 2017  

It is established that access to finance is a major challenge to MSMEs in Nigeria, as it is in many countries. The Credit Reporting Act, 2017 will open credit facilities to a larger population of Nigerians through a consumer credit system, facilitate the production of effective credit data bases that can be leveraged as a risk assessment tool in determining the credit worthiness of individuals seeking credit through the country’s financial system, promote a fair and competitive credit reporting system and set standards and conditions for the establishment, regulation and operations of Credit Bureaus.

The Credit Reporting Act provides a legal structure for Credit Bureau Services in Nigeria through the consumer measuring system. This system involves the establishment of a credible and credit data-base to determine the ability of every Nigerian to receive and repay a loan in Nigeria.

The Act provides a framework for credit reporting, establishment of credit bureaus, facilitation and promotion of access to credit and it also enhances risk management in credit transactions. It provides for licensing of credit bureaus, providing information on individuals’ borrowing and bill-paying habits. Adequate credit information could facilitate lenders in screening and monitoring borrowers as well as avoiding giving loans to high risk individuals. At the same time, consumers benefit from a good credit information system because it reduces the effect of credit monopoly from banks and provides incentives for borrowers to repay their loans on time.

This Act will:

  • Make loans readily available to more Nigerians especially those who might not necessarily have collateral but have good standing and are able to repay;
  • Make it easier for Nigerians to access loans through the banking system for personal or business transactions and reduce the risk of lending for banks
  • Improve access to loans for micro and small businesses; and Reduce the rate of unrepaid loans because of the system that will be used to check each borrower’s ability to pay. Because of this system, there would be reduced loss ad more money available to people who can actually repay their loans  


  • The 8th Nigerian Senate has introduced the  NS8 Chatbot , an online Artificial Intelligence (AI) - powered information service for Nigerians interested in the outgoing 8th Senate's activities, key interventions and achievements. 
  • Read the Bill: SB.205 Credit Bureau Reporting Bill

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