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LASMECO programme offers 9% interest loans through cooperatives to tackle financing barriers and accelerate business expansion
The Lagos State Government has unveiled a new financing initiative that will provide single-digit interest loans of up to ₦10 million to Micro, Small and Medium Enterprises (MSMEs), marking a significant intervention aimed at improving access to affordable credit, stimulating entrepreneurship and strengthening the state’s economic growth.
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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, substantially below prevailing commercial lending rates that currently range between 35 and 40 per cent.
The financing package includes repayment periods of up to 36 months for term loans and 24 months for working capital facilities, alongside moratoriums of six months and three months respectively, providing businesses with much-needed breathing space before repayments commence.
The programme was officially launched during the opening of the three-day LASMECO Accelerator Training Workshop, organised by the Lagos State Ministry of Commerce, Cooperatives, Trade and Investment in Lagos.
Bridging the Financing Gap for SMEs
Delivering the keynote address, the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs. Folashade Bada Ambrose-Medebem, said the initiative was specifically designed to address one of the biggest challenges confronting Nigerian entrepreneurs—limited access to affordable financing.
Represented by the Director of Cooperative Services, Adeyinka Adeyemi, the Commissioner noted that thousands of viable businesses have remained excluded from formal credit because of prohibitive interest rates and stringent collateral requirements imposed by conventional lenders.
She explained that LASMECO introduces an innovative financing model that leverages registered cooperative societies as financial intermediaries and guarantors, enabling entrepreneurs to access funding without relying solely on traditional collateral.
“Our objective is to remove the financial barriers limiting the growth of MSMEs by providing affordable financing through a sustainable partnership involving government, financial institutions and cooperative societies,” she said.
Innovative Risk-Sharing Model
Unlike conventional commercial loans, the LASMECO programme adopts a layered risk-sharing framework designed to reduce lending risks while expanding access to finance.
Under the arrangement:
- Beneficiaries will provide 10 per cent cash collateral.
- Registered cooperative societies will guarantee 25 per cent of the loan value.
- Sterling Bank Plc will provide an additional 50 per cent guarantee.
- The Bank of Industry (BOI) will serve as co-funder and final loan approver.
- Sterling Bank will handle application processing, credit assessments, loan disbursement and repayment recovery.
The Commissioner disclosed that the Lagos State Government has already released its counterpart funding, while the Bank of Industry has matched the state’s contribution, paving the way for loan disbursement.
Priority Sectors to Benefit
The financing programme targets high-impact sectors capable of generating employment and accelerating economic development.
Eligible businesses include those operating in:
- Agriculture
- Manufacturing
- Healthcare
- Digital Economy
- Creative Industries
- Tourism
- Environmental Sustainability
- Education
The initiative aligns with Lagos State’s broader strategy of supporting productive enterprises that contribute to innovation, industrialisation and inclusive economic growth.
MSMEs: The Backbone of Nigeria’s Economy
The launch of LASMECO comes as policymakers continue to recognise the central role MSMEs play in Nigeria’s economic development.
According to national MSME statistics:
- SMEs contribute approximately 48 per cent of Nigeria’s Gross Domestic Product (GDP).
- They account for about 96 per cent of businesses nationwide.
- The sector provides nearly 84 per cent of total employment.
- Nigeria had an estimated 39.65 million MSMEs as of December 2021.
Lagos remains Nigeria’s largest SME hub, accounting for the highest concentration of enterprises across all categories.
Within Lagos State alone, MSMEs contribute approximately 75 per cent of the state’s Gross Domestic Product (GDP) while generating about 80 per cent of total employment, making the sector critical to sustainable economic growth.
Affordable Finance Could Improve SME Survival
Industry experts believe access to affordable financing remains one of the biggest determinants of business survival in Nigeria.
Research indicates that:
- More than 50 per cent of SMEs fail within their first year of operation.
- Over 95 per cent do not survive beyond their first five years.
- More than 40 per cent of business failures are linked to inadequate market demand, poor financing and infrastructure challenges.
High borrowing costs have compounded these challenges, with commercial lending rates often exceeding 35 per cent annually—levels considered unsustainable for most small businesses.
The LASMECO programme seeks to reverse this trend by lowering financing costs and reducing collateral barriers.
Supporting Lagos’ Digital and Innovation Economy
Beyond traditional sectors, the inclusion of businesses operating within the digital economy reflects Lagos State’s ambition to strengthen its position as Nigeria’s leading innovation and technology hub.
Technology startups, digital service providers and creative enterprises stand to benefit from affordable capital needed to scale operations, invest in innovation and create new employment opportunities.
The initiative also complements broader efforts to deepen financial inclusion while promoting entrepreneurship among young Nigerians.
Public-Private Partnership Driving Inclusive Growth
The LASMECO initiative demonstrates the growing role of public-private partnerships in expanding access to finance for small businesses.
By bringing together the Lagos State Government, the Bank of Industry, Sterling Bank and registered cooperative societies, the programme creates a collaborative financing ecosystem capable of supporting enterprise development at scale.
The partnership is expected to reduce lending risks while increasing confidence among participating financial institutions.
A Catalyst for Business Growth
With affordable financing widely recognised as one of the biggest constraints facing Nigerian entrepreneurs, stakeholders believe the LASMECO programme could significantly improve business expansion, job creation and economic resilience across Lagos.
By lowering borrowing costs, simplifying access to credit and strengthening institutional collaboration, the initiative positions Lagos as a model for SME financing and reinforces the state’s commitment to building a more inclusive and competitive economy.
As loan disbursement begins, thousands of entrepreneurs are expected to benefit from a financing framework designed to unlock investment, stimulate innovation and support the long-term growth of Nigeria’s largest subnational economy.
