Lagos unveils N10m single-digit loan scheme for MSMEs

The Lagos State Government has launched a new financing initiative that will provide single-digit interest loans of up to N10 million to micro, small and medium enterprises (MSMEs), in a major push to improve access to affordable credit and stimulate business growth across the state.

The initiative, known as the Lagos State Access to Finance for SMEs through Cooperatives (LASMECO) programme, offers eligible businesses loans at a fixed 9 per cent annual interest rate, with repayment periods of up to 36 months for term loans and 24 months for working capital facilities. Beneficiaries will also enjoy moratoriums of six months and three months respectively.

The scheme was unveiled on Monday during the opening of a three-day LASMECO Accelerator Training Workshop organised by the Ministry of Commerce, Cooperatives, Trade and Investment, in Lagos.

In her keynote address, the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Bada Ambrose-Medebem, said the programme was designed to bridge the financing gap facing thousands of Lagos businesses that have been priced out of conventional lending because of high interest rates and stringent collateral requirements.

Ambrose-Medebem, represented by the Director of Cooperative Services, Adeyinka Adeyemi, noted that MSMEs account for about 80 per cent of employment and contribute roughly 75 per cent of Lagos State’s Gross Domestic Product (GDP), yet many struggle to access affordable credit as commercial lending rates range between 35 and 40 per cent.

According to the commissioner, LASMECO addresses the challenge by using registered cooperative societies as financial intermediaries and guarantors, allowing entrepreneurs to obtain loans without relying solely on conventional collateral.

Under the financing framework, she said borrowers will provide 10 per cent cash collateral, while their cooperative societies will guarantee 25 per cent of the loan, adding that Sterling Bank Plc would provide a 50 per cent guarantee, creating a layered risk-sharing structure that makes lending more accessible and sustainable.

The programme targets businesses in agriculture, manufacturing, healthcare, the digital economy, creative industries, tourism, environmental sustainability and education.

The commissioner disclosed that the Lagos State Government has released its counterpart funding, while the Bank of Industry (BOI) has matched the state’s contribution, paving the way for loan disbursement, saying that BOI would serve as co-funder and final loan approver, while Sterling Bank would process applications, conduct credit assessments, disburse funds and recover repayments.

The commissioner reaffirmed the Lagos State Government’s commitment to ensuring the success of the initiative, expressing confidence that the programme would unlock affordable financing for thousands of entrepreneurs while boosting employment, productivity and economic development across the state.

Earlier, the Permanent Secretary in the ministry, Mr Babatunde Onigbanjo, said the workshop marked the transition of LASMECO from policy to implementation, stressing that the programme was fully funded and ready for rollout.

He said all necessary groundwork had been completed, including the release of counterpart funding, execution of memoranda of understanding and onboarding of accelerator organisations, adding that participants were now being equipped to begin recruiting and preparing loan beneficiaries.

According to him, the three-day workshop is designed to prepare accelerator organisations to identify eligible MSMEs, assess their credit readiness, compile loan applications and support borrowers from application through disbursement and repayment.

Onigbanjo urged participants to focus on quality rather than quantity in recruiting loan applicants, warning that poorly prepared businesses could increase loan defaults and undermine the programme.

He stressed that accelerator organisations would only be paid when the businesses they support successfully secure funding, saying the arrangement was intended to align their interests with the success of the programme.

The permanent secretary also emphasised that every loan applicant must belong to a registered cooperative society, describing the cooperative model as central to the programme because cooperatives provide a 25 per cent guarantee for every facility while helping to formalise informal businesses.

He disclosed that Lagos has more than 13,000 registered cooperative societies, although only about 1,900 to 2,200 are currently active, adding that reviving dormant cooperatives would significantly expand access to the financing scheme.

Onigbanjo warned accelerator organisations against charging applicants processing, training or evaluation fees, stressing that the only approved deductions are a N200,000 accelerator support fee and a one per cent BOI appraisal fee, both payable only after successful loan disbursement.

He said the state would closely monitor loan recovery, business growth, job creation, cooperative compliance and portfolio performance, adding that only accelerator organisations that deliver strong results would remain in the programme.

The permanent secretary described LASMECO as more than a loan scheme, saying it is also a strategy to formalise businesses, strengthen cooperatives, promote industrialisation and drive inclusive economic growth across Lagos.

He urged participants to make full use of the workshop to prepare for immediate enrolment of qualified businesses, insisting that the programme had moved beyond planning and was now ready for implementation.