The list below is focused on loan, equity and grant fund providers registered or active in Nigeria and beyond.
The term commercial bank refers to a financial institution that accepts deposits, offers checking account services, makes various loans, and offers basic financial products like current, savings and deposit accounts to individuals, SMEs and large businesses.
They are found all over the world and it is where most people do their banking and they make money from a variety of fees and by earning interest income from loans.
Commercial banks have traditionally been located in physical locations, but a growing number now operate exclusively online. These banks are important to the economy because they create capital, credit, and liquidity in the market.
View the list of Commercial Banks in Nigeria here.
The term merchant bank refers to a financial institution that conducts underwriting, loan services, financial advising, and fundraising services for large corporations and high-net-worth individuals (HWNIs).
Merchant banks are experts in international trade, which makes them specialists in dealing with multinational corporations.
Unlike retail or commercial banks, merchant banks do not provide financial services to the general public.
A finance company is an organization that makes loans to individuals and businesses. Unlike a bank, a finance company does not receive cash deposits from clients, nor does it provide some other services common to banks, such as checking accounts. Finance companies make a profit from the interest rates (the fees charged for the use of borrowed money) they charge on their loans, which are normally higher than the interest rates that banks charge their clients.
Many finance companies lend to clients who cannot obtain loans from banks because they are considered as high risk. Such clients secure their loans with finance companies by pledging personal asset collateral equal value to the loan if payment on the loan is not made.
Micro Finance Banks are created to fight poverty by providing financial services to the poor who are traditionally not served by the conventional financial institutions.
These banks provide essential financial services (such as savings, lending, domestic fund transfers, etc.) to low-income earners, the unbanked and under-served groups like market women and unemployed youths.
Fintech is a combination of the words finance and technology and it describes the group of new financial technologies designed to enhance and automate the use and delivery of financial services. It is changing how we save, borrow, and invest money by making digital financial transactions easier and simpler, without the need for a traditional bank.
The Fintech industry is made up of companies that apply new technology to financial businesses. For example, companies that develop new digital payment-processing solutions are considered fintech, as are companies that build and operate person-to-person payment applications. Fintech companies are more online based with vey limited or even zero physical branches.
Interest-free Banking or Islamic Banking Finance is a lending system, that adheres to rules of” Shariah”. According to the laws, the “riba” (interest) is debarred from practising and known to be unethical according to the religion. Such a system practices banking principles by no existence of any interest but solely based on profit sharing idea. The profit-sharing principles allow the borrowers to enjoy interest-free loans with no fluctuation according to the market, but the profits generated by the borrower will be shared with the bank.
Development banks are financial institutions that provide long-term capital to productive sectors, often for infrastructure, manufacturing, managerial and technical assistance. These banks are the most widely used instruments of funding and assistance for projects that require long-term maturity.
They are designed to provide medium-and long-term capital for productive investment, often accompanied by technical assistance, and fill the gap left by undeveloped capital markets and the reluctance of commercial banks to offer long-term financing. They are set up by national and international governments.
Read key differences between Commercial banks and Development Finance Banks here.
List of development finance banks in Nigeria and beyond
Private equity (PE) is ownership or interest in an entity that is not publicly listed or traded.
The private equity (PE) industry is comprised of institutional investors such as pension funds, and large private equity (PE) firms funded by accredited investors. Because private equity (PE) entails direct investment—often influence or control over a company’s operations—a significant capital outlay is required, which is why funds with deep pockets dominate the industry.
The underlying reason for such commitments is to achieve a positive return on investment (ROI). Private equity (PE) firms raise funds and manage these monies to yield favorable returns for shareholders, typically with an investment horizon of between four and seven years.
List of private equity firms active in Africa including Nigeria
The list includes grant providers in Nigeria.
Angel investors are wealthy individuals who typically invest their personal net worth in startups. They offer a cash injection to help fuel growth and development. The investment amounts can vary widely, ranging from hundreds of dollars to over $1 million. In some cases, angel investors join together in syndicates to pool their resources and invest larger sums.
Angel investors often participate in seed and pre-seed funding rounds, where the risk is higher but the potential for significant returns is also greater. When negotiating investment terms, angels may request an equity stake in the company.
The percentage can differ depending on the specific scenario and level of risk involved.
Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of people through social media and crowdfunding websites to bring investors and entrepreneurs together, with the potential to increase entrepreneurship by expanding the pool of investors beyond the traditional circle of owners, relatives, and venture capitalists.