Beyond Connectivity: Financing the MSMEs Building Nigeria’s Digital Economy

Nigeria has built a large digital market, but not yet the enterprise base required to convert that scale into economy-wide productivity. Technology now shapes how Nigerians pay, trade, learn, communicate and run businesses. ICT accounted for 10.40% of real GDP in 2025, confirming the sector as a major source of output and innovation. Yet economic weight alone does not reveal the depth of the digital economy[1].

The underlying structure is less impressive. ICT’s share of private sector credit fell from 6.24% in 2015 to 3.07% in 2025. Internet use reached only 41.21% of the population in 2024, while fixed broadband penetration stood at just 0.08 subscriptions per 100 people. Nigeria has expanded digital participation faster than the infrastructure and enterprise finance needed to convert access into sustained productivity (Central Bank of Nigeria [CBN], 2026; International Telecommunication Union [ITU], 2026a, 2026b; National Bureau of Statistics [NBS], 2026).

These weaknesses reinforce one another. Shallow infrastructure raises the cost of delivering digital services. Limited enterprise finance constrains investment in software, equipment, talent and market expansion. The result is a digital economy with visible scale at the top but a thin productive base beneath it.

[1] In this paper, digital depth refers to the extent to which reliable, high-capacity infrastructure, enterprise capabilities, appropriate finance and productive adoption enable digital technologies to raise output and productivity across sectors.

Fig. 1: ICT Economic Weight and Credit Allocation

ICT remains a major contributor to real GDP, while its share of private sector credit has declined.

Data Source: Authors’ Computation from CBN and NBS data.

Bank credit to ICT increased from ₦816.38 billion in 2015 to ₦1.76 trillion in 2025. That increase is substantial in naira terms, but it does not describe a steady deepening of finance. Credit represented 10.59% of ICT GDP in 2015, fell to 5.06% in 2019, recovered to 10.00% in 2023 and declined to 7.63% in 2025. Financing has expanded, but not in a stable relationship with the size of the sector.

The volatility matters because technology investment is rarely short term. Software firms must finance product development before revenues stabilise. Connectivity and hardware businesses require equipment with long recovery periods. Digital service providers need working capital to recruit specialised talent, execute contracts, and expand distribution. An uneven supply of credit therefore weakens the ability of viable firms to plan, invest and scale.

Fig. 2: Bank Credit to ICT as a Share of ICT GDP[1]

Financing depth recovered in 2023 but weakened again by 2025.

Data Source: Authors’ Computation from CBN and NBS data.

Nigeria’s digital expansion has been overwhelmingly mobile led. The share of individuals using the Internet increased from 21.00% in 2014 to 41.21% in 2024. Mobile subscriptions reached 98.48 per 100 people in 2023 before falling to 70.76 in 2024, largely reflecting the deactivation of SIM cards not linked to verifiable National Identification Numbers and the correction of previously overstated active subscriber records following an industry audit by the Nigerian Communications Commission (NCC). Even so, the broader pattern is clear: mobile access has carried the expansion of Nigeria’s digital market.

Fig. 3: Internet Use and Mobile Connectivity

Internet use has expanded, while mobile connectivity remains the dominant access channel.

Data Source: International Telecommunication Union.

[1] Bank credit to ICT represents the outstanding stock of deposit money bank credit to the Information and Communication sector at the end of December each year. The ratio is calculated by dividing the December credit stock by annual ICT GDP. It is used as an indicator of financing depth and does not represent the annual flow of new credit to the sector.

Mobile access, however, is not a substitute for the reliable, high capacity infrastructure required for productive digital activity. Fixed broadband subscriptions increased from 0.01 per 100 people in 2014 to only 0.08 in 2024. Nigeria’s digital economy therefore remains overwhelmingly mobile-led, while the fixed connectivity required for cloud computing, remote work, enterprise software, digital production, and data-intensive services remains exceptionally limited.

Productive connectivity extends beyond subscription numbers. It also depends on network speed, service reliability, latency, affordability, fibre availability, mobile broadband quality and electricity supply. By December 2024, 4G LTE covered 84.60% of Nigeria’s population, while 5G coverage stood at 13.28% and broadband penetration at 44.43% (NCC, 2025). In September 2025, national median download speeds stood at 44.59 Mbps for mobile broadband and 29.37 Mbps for fixed broadband, with median latency of 30 milliseconds and 24 milliseconds, respectively (Ookla, 2025).

The distinction is fundamental. Digital access allows people to consume services; digital depth enables enterprises to create, process and exchange value at scale. Nigeria has expanded access, but it has not yet built the infrastructure quality and reach required to convert connectivity into broad-based productivity.

Fig. 4: Fixed Broadband Penetration

Fixed broadband penetration remained negligible despite gradual improvement.

Data Source: International Telecommunication Union.

The technology firms most visible to the public are not representative of the entire sector. Beneath the prominent fintechs and venture-backed startups lies a broad enterprise base of software developers, cybersecurity firms, repair and maintenance businesses, hardware assemblers, business-process providers, e-commerce enablers, connectivity companies, digital creators and platforms serving agriculture, education, healthcare, trade and manufacturing. These MSMEs are the transmission mechanism through which digital technology raises productivity across the wider economy.

Yet many fall between two financing models. Conventional lenders remain cautious where assets are intangible, revenues are evolving and collateral is limited. Venture capital, by contrast, seeks a narrow group of firms capable of delivering exceptional equity returns. The enterprises between these two models may be viable, revenue-generating and capable of creating jobs, but still unable to obtain the kind of finance required for sustained growth.

Their needs are not uniform. Early-stage firms may require grants, incubation and technical assistance before they can carry debt. Firms with recurring revenues may need cash-flow-based working capital. Hardware and connectivity providers need longer-tenured equipment finance. Businesses supplying large organisations or government may require invoice finance to bridge delayed payments. A technology-finance strategy that treats every firm as either a conventional borrower or a venture-capital candidate will continue to leave much of the sector unserved.

The financing gap is therefore not simply a shortage of money. It is a shortage of instruments and appraisal methods suited to technology enterprises. Closing it requires a financing ladder: catalytic support at the earliest stage, risk capital for uncertain innovation, patient debt for firms with proven cash flows, equipment and invoice finance for asset and contract-based businesses, and risk-sharing mechanisms that encourage participating financial institutions to lend beyond conventional collateral.

A functional financing ladder must match the form of capital to the enterprise’s stage of development, revenue visibility, and investment purpose.

DBN is well positioned to strengthen this financing ladder by combining grants and technical assistance for early-stage enterprises with patient wholesale funding, risk-sharing instruments and capacity building for participating financial institutions. The objective is to enable viable firms to move from one stage of finance to the next rather than remain trapped between grant dependence, unsuitable bank credit and inaccessible venture capital. Through targeted capacity building, sector-specific appraisal frameworks and pilot financing programmes, the Bank can support participating financial institutions to evaluate technology enterprises using evidence such as recurring revenues, executed contracts and verified digital transaction records, alongside conventional financial and credit information.

DBN’s annual disbursement to technology MSMEs increased from ₦1.69 billion in 2018 to ₦13.30 billion in 2025, with an earlier peak of ₦13.23 billion in 2023. Supported technology enterprises reported 2,835 jobs created and sustained in 2025. The expansion of DBN’s technology portfolio indicates demand for appropriately structured finance and provides a basis for testing which instruments, borrower characteristics and support mechanisms are associated with stronger enterprise outcomes.

Fig. 5: DBN Technology MSME Disbursements[1]

DBN technology disbursements have expanded, although the annual path remains uneven.

Data Source: DBN.

[1] Methodological note: Disbursements are annual flows for the stated years. Employment is presented as jobs created and sustained by supported enterprises.

Nigeria’s next digital challenge is not simply to connect more people. It is to build the infrastructure, enterprises and financing architecture that convert connectivity into productive capacity. That transition requires coordinated action across government, financial institutions, development finance institutions, investors and large organisations.

Delivering these priorities would strengthen the foundations of Nigeria’s digital economy. Better infrastructure expands the market that technology enterprises can serve. Better financing allows viable firms to invest in products, equipment, talent and distribution. Stronger procurement links give those firms customers, revenues and records that improve their bankability. Together, these shifts can turn digital participation into productive capacity.

The objective is not to finance technology for its own sake. It is to build the enterprises that make every other sector more productive, extend digital opportunity beyond a few firms and locations, and convert Nigeria’s digital scale into resilient businesses, skilled jobs and broad-based growth.

Central Bank of Nigeria. (2026). Quarterly statistical bulletin, volume 14, number 3. https://www.cbn.gov.ng/documents/QuarterlyStatbulletin.html

Development Bank of Nigeria. (n.d.). MSME data insight dashboard. Retrieved September 20, 2026, from https://data.devbankng.com/insight

International Telecommunication Union. (2026a). Fixed broadband subscriptions (per 100 people): Nigeria [Data set]. World Bank Open Data. https://data.worldbank.org/indicator/IT.NET.BBND.P2?locations=NG

International Telecommunication Union. (2026b). Individuals using the Internet (% of population): Nigeria [Data set]. World Bank Open Data. https://data.worldbank.org/indicator/IT.NET.USER.ZS?locations=NG

International Telecommunication Union. (2026c). Mobile cellular subscriptions (per 100 people): Nigeria [Data set]. World Bank Open Data. https://data.worldbank.org/indicator/IT.CEL.SETS.P2?locations=NG

National Bureau of Statistics. (2026). Nigerian Gross Domestic Product report: Fourth quarter and full year 2025. https://microdata.nigerianstat.gov.ng/index.php/catalog/147/related-materials