BOI ESG report highlights funding, skills gaps for MSMEs

The Bank of Industry has identified limited funding and a lack of technical capacity as the biggest barriers hindering ESG adoption by businesses in the country.

According to a statement on Tuesday, the bank made this observation  as it launching its ‘Environmental, Social and Governance Adoption by Nigerian Micro, Small and Medium Enterprises’ report.

The report, launched in Lagos at the BOI’s inaugural ESG conference, was tagged ‘Advancing ESG adoption’.

The statement added that other challenges hindering adoption include inadequate policy-linked incentives, limited knowledge and low customer demand.

The statement stressed that the survey, conducted across the country’s six geopolitical zones, captured over 300 valid responses from a diverse pool of MSMEs spanning agro-processing, information and communication technology, manufacturing, creative industries, hospitality, healthcare, engineering & construction, and financial services.

The survey stated that 78 per cent of enterprises lamented financial limitations, and 65 per cent complained about a lack of technical expertise, underscoring the need for targeted financing and capacity-building support for MSMEs.

“The report also showed that 65 per cent cited inadequate ESG-oriented incentives to enable growth, while 20 per cent of MSMEs stated a lack of customer demand, with further findings showing that 45 per cent lack knowledge, concluding that market forces alone are insufficient to drive ESG adoption. Key insights and improvement areas in the report included ESG-compliant products with targeted loan features, targeted capacity building, inclusive leverage for broader reach for older entrepreneurs and introducing women-focused ESG-compliant credit windows to narrow the gender adoption gap. Other areas are leveraging blended financing to improve access to ESG-linked capital and technical upskilling via regional hubs,” the statement read in part.

Speaking at the event, the Managing Director/Chief Executive Officer of BOI, Dr Olasupo Olusi, said MSMEs account for over 80 per cent of Nigerian businesses, contribute nearly half of the country’s gross domestic product and employ millions of Nigerians.

He said that many still face barriers in understanding what ESG means in practice and how to embed the principles in their daily operations.

Olusi stated that these barriers make many enterprises more vulnerable, less competitive and less future-ready, adding that BOI aims to bridge this gap by equipping MSMEs to grow, compete and prosper sustainably and profitably in the evolving landscape of the global economy.

The BOI MD said the report aligns with Nigeria’s commitments under the Paris Agreement, the Nationally Determined Contributions, and the Energy Transition Plan, particularly in achieving the country’s 47 per cent conditional emission reduction target by 2030.

Olusi explained that ESG adoption will improve access to finance, especially as global investors and development finance institutions prioritise sustainability projects.

He added that it will also help businesses manage risks, reduce costs, attract talent and comply with emerging international standards.