Edo launches N1 billion interest-free loan scheme for small businesses

Edo State has introduced a N1 billion ($645,000) interest-free loan scheme targeting small businesses and farmers, in an effort to stimulate local economic activity as the state grapples with high poverty and a cost-of-living crisis.

Gov. Monday Okpebholo unveiled the initiative Friday in Benin, the state capital, pledging that at least 5,000 micro and small businesses will benefit. Each beneficiary is expected to receive between N200,000 and N500,000, with a 12-month repayment period and a one-month grace before repayments begin.

The initiative, described as a pilot phase, is aimed at easing credit constraints faced by informal businesses, which dominate Nigeria’s economy but often lack access to affordable financing. Okpebholo said the loans will go directly to market traders and small-scale entrepreneurs across Edo’s three senatorial districts.

“Before now, our mothers collected loans and paid 10% on N200,000. For this, there is no interest. You pay back what you borrowed,” the governor said, promising personal oversight to ensure the funds reach intended recipients. “If you do not get this, come back to me and report.”

About 36% of Edo State’s estimated 5 million people live below the national poverty line, according to the National Bureau of Statistics, making interventions like this critical for supporting household incomes and small enterprise growth.

Nigeria’s broader macroeconomic environment, marked by high inflation reaching 23.71% in April, and a weakened naira, has placed further strain on informal businesses and rural livelihoods.

Loans at zero interest could counteract these pressures at the grassroots level, and if successfully implemented, could provide a template for other Nigerian states seeking to directly address credit gaps for microenterprises and informal traders.

Okpebholo, who assumed office earlier this year, has pledged further expansion of the loan programme if this initial phase performs well.

Local business associations and market groups have welcomed the initiative, describing it as a potential lifeline amid Nigeria’s challenging economic conditions.

*Exchange Rate Used: USD$1: N1550