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Nigeria
Diversity characterises Africa’s biggest economy
Home to over 200 million people, Nigeria is Africa’s most populated country and its economy is also the continent’s largest. Nevertheless, the country is marked by unemployment, poverty and violent conflicts – all of which have been exacerbated by the COVID-19 pandemic. Nigeria’s economic development is primarily based on oil production and is dependent on the development of oil prices. The country is also very diverse in terms of ethnicities, religions and local economies. The economic centre of Lagos and the rich oil fields are located in the south, the polar opposite to the north-east of the country where the terrorist group Boko Haram are active. KfW Development Bank has already been involved here for almost 20 years, helping to fight against polio. What’s more, it promotes economic development, employment opportunities, agriculture and food security across the whole country, and has also recently started supporting climate and energy projects.
Under-employment and unemployment drive impoverishment, conflict and ecocide. The core objective of Financial Cooperation with Nigeria is therefore to create more jobs for the fast-growing population. To achieve this, the Development Bank of Nigeria was launched in 2017 – supported by KfW in conjunction with other donors. It is built on international best practices and issues credit to commercial banks and micro-finance institutions to achieve its aims, which include giving micro, small and medium sized enterprises (MSMEs) access to medium- and long-term loans and other financial products. With this approach, the Development Bank of Nigeria has been able to forego setting up its own costly network of branches by working directly with existing banks and micro-finance institutions. A great deal of focus is placed on promoting female entrepreneurs, who make up over 50%.
The credit guarantee facility InfraCredit takes another approach, though it also aims to stimulate private investments. InfraCredit has been promoted by KfW since 2017 and secures investments from institutional equity owners (e.g. pension funds), which are used to finance privately run infrastructure projects. This approach helps to mobilise private Nigerian capital for urgently needed energy, water supply and other infrastructure projects. This type of investment is not only greatly needed in Lagos – home to a good 20 million people – but also the country as a whole.
Project information - Financial Sector (PDF, 153 KB, non-accessible)
KfW Development Bank also supports investments in energy efficiency and renewable energy sources in Nigeria. In addition to this, a green credit line is due to start in 2022 and will be managed by the Development Bank of Nigeria. This is designed to enable MSMEs to make investments, for example to purchase energy-efficient machinery and equipment or use renewable energy sources. Through these partners, it gives its MSME clients access to long-term and needs-based financing for necessary “green” investments. The energy costs saved increase the businesses’ profits, thereby promoting their sustainable growth. The Development Bank of Nigeria’s green credit line therefore not only has the potential to create jobs and contribute to the promotion of the private sector and sustainable economic development. It is also helping the Nigerian government to achieve the ambitious goals it has set for the energy sector.
Increasing incomes, improving supply, creating jobs, and – depending on which agricultural company is promoted – increasing foreign exchange receipts. These are the goals of the agricultural financing fund FAFIN. The fund is financed by the Nigerian government, KfW and other development financiers. Small and medium-sized businesses across the agricultural value creation chain can use FAFIN capital for investments, e.g. to process the root vegetable cassava into tapioca starch or to produce dairy products. The businesses involved in the programme also receive training in cultivation, processing and marketing. A follow-up fund (FAFIN II) is also planned for the next few years. The aim of this fund is to also cater to businesses in neighbouring countries beyond Nigeria.
The Nigerian social enterprise Babban Gona focuses on other areas. Founded in 2012, it uses a franchise model to give families of smallholders access to seeds, expertise, training, financial services and marketing opportunities. The smallholders learn how to increase their income, save costs and achieve fair prices. Shares are also transferred to participants, making them co-owners of the enterprise. In total, it has already helped to create as many as 300,000 new jobs the agricultural sector. Working with other partners, KfW is helping Babban Gona to expand this model to Ghana, Ethiopia and Kenya.
Fighting polio and supporting disadvantaged municipalities, particularly in the country’s north-east, is another focus area of Financial Cooperation’s involvement in Nigeria. In 2005, KfW began providing the country with financial support to implement vaccination campaigns to prevent polio, which are coordinated and run by WHO and UNICEF in liaison with a Nigerian executing agency. And these campaigns have been a great success: no new outbreaks of wild poliovirus have been registered in Nigeria since August 2016. WHO declared the country “polio-free” on 25 August 2020.
In the crisis region of north-east Nigeria, which has been rendered instable by terrorist activity, KfW is working with UNICEF and Nigerian municipalities to provide funds aimed at giving children access to good education. Here, the primary aim is to transform schools into safe places for learning and development. In an environment of crisis, providing safe access to education aims to make children and their families more resilient and less susceptible to radicalisation.
Another project is focusing on the Lake Chad Basin located in the border region between Nigeria, Niger and Chad. New infrastructure in the communities, investments in local agriculture, more employment opportunities and reinforced local management structures are expected to stabilise the area as a place to live. Other measures to promote peace are also designed to improve social cohesion in the area of Lake Chad.
Project Information - Health sector (PDF, 118 KB, non-accessible)
Further information
- Learn more about the impact of our work in Nigeria in our transparency portal
- Read more about our completed projects in the evaluation reports on Nigeria
- The BMZ's priorities in Nigeria can be found directly on the Ministry's website
- On the website of the Federal Foreign Office you will find detailed information about Nigeria