ARM Investment Managers has launched a N200 billion Private Debt Fund aimed at providing long-term and affordable financing for Nigeria’s small and medium-sized enterprises at rates below the current market benchmark of about 27 percent. The initiative was unveiled in Lagos as part of the company’s broader SME financing strategy to expand access to non-bank credit for businesses struggling with high borrowing costs.

The announcement was made by the Chief Executive Officer of the ARM Private Debt Fund, Deji Opeola, during the launch of the SME financing initiatives. He said the programme has an initial Series 1 size of N25 billion, with an overall shelf target of N200 billion under applicable regulatory frameworks.

Opeola explained that the fund is designed to channel private capital to scalable SMEs that are often excluded from affordable credit by commercial banks due to risk considerations and regulatory limits. He noted that private credit remains an important but underdeveloped segment in Nigeria’s financial system.

“Private credit plays a vital role in modern financial systems. The Series I offering is targeting an initial raise of N25bn, forming part of a broader N200bn shelf programme registered under applicable regulatory frameworks,” he said.

According to him, the fund will deploy capital through senior secured term loans, revolving credit facilities, and selective subordinated debt to qualified SMEs operating across key sectors of the Nigerian and Sub-Saharan African economy.

Opeola said the launch is coming at a time when access to long-term credit remains a major challenge for SMEs, despite their importance to the economy. He stated that SMEs account for nearly half of Nigeria’s Gross Domestic Product and more than 80 percent of employment, yet continue to face funding constraints.

He added that the fund has been carefully structured to address this gap without compromising investor protection. “This fund has been deliberately structured to combine strong governance, rigorous credit underwriting, and active portfolio management. Our objective is to protect investor capital while supporting the growth of viable SMEs that create jobs, deepen local value chains, and contribute meaningfully to economic development,” Opeola said.

He further pointed to structural issues within the banking sector, noting that “regulatory constraints, rising interest rates, and balance-sheet pressures have curtailed the ability of traditional banks to meet the sector’s financing needs.”

Speaking on the wider credit gap, Opeola said Africa faces an SME financing shortfall of over $40 billion, compared to about $3.3 billion in private credit assets under management. He said Nigeria alone accounts for $32.2 billion of this gap, despite banks providing about 90 percent of all credit on the continent while remaining largely risk-averse to SMEs.

Also speaking at the event, the Chief Executive Officer of ARM Holding, Wale Odutola, said inclusive economic growth will require substantial investment in alternative asset classes over the coming years. He explained that these assets are not well represented in traditional stock or bond markets.

“By ‘alternative,’ I mean asset classes that are not well represented in the organised markets, such as stock or bond markets. These asset classes include infrastructure, solid minerals, agriculture, private debt, trade, and the creative sector,” Odutola said.

He added that significant capital is needed in these areas for Nigeria to grow at the desired pace and ensure that growth reaches broader segments of society. Odutola said the private debt fund aligns with this vision and has been in development for over 12 months.

“We believe that by organising ourselves in a way that allows private companies like ours to launch a fund capable of providing the required capital, private sector companies can tap into funding that helps them drive growth, expand operations, improve service quality, increase output, grow market share, and extend coverage across Nigeria and beyond,” he said.