Credit Guarantee Scheme: How to become a CBN credit guarantor

 

...scheme to solve the challenge of limited access to credit by MSMEs.

by Ubah Jeremiah Ifeanyi

The Central Bank of Nigeria has established the Credit Guarantee Schemes to promote lending to MSMEs and remove barriers to their growth.

Credit Guarantee Companies (CGCs) are supposed to provide lenders with third-party credit risk mitigation by absorbing a percentage of the lender’s losses on loans given to Nigerian Micro, Small, and Medium Enterprises (MSMEs) in the event of failure.

A CGC guarantee represents a legal pledge to discharge an agreed portion of a borrower’s liability in the event of default.