What is a Credit Guarantee Company (CGC)?

A CGC is an institution licensed with the primary objective of providing guarantees to banks and other financial institutions against the risk of defaults by debtors.

The objective of a Credit Guarantee Company (CGC) is to:

  • Improve access to credit for MSMEs
  • Reduce credit risk by providing guarantees to Participating Financial Institutions (PFIs)
  • Encourage lower interest rates
  • Encourage new business formation
  • Improve risk management.

Apart from guaranteeing loans, CGCs are permitted to also render advisory services, partake in other investments as approved by the Central Bank of Nigeria (CBN) as well as invest funds in government securities. They are however not permitted to provide guarantees to entities outside Nigeria, provide guarantees to entities within its holding company structure, guarantee loans of any institution it is indebted to, accept savings and deposits, provide credit to customers or manage pension fund amidst others.


The promoters of a CGC shall apply in writing to the Governor of the Central Bank of Nigeria; CBN with the following documents:

  • Application fee of N100,000.00 (One Hundred Thousand Naira) in bank draft payable to the CBN
  • Evidence of deposit of the minimum paid up capital requirement of N10,000,000,000.00 (Ten Billion Naira) or any other amount as may be prescribed by the CBN. Note that the CBN shall refund the sum deposited to the promoters upon the grant of the license)
  • Evidence of the capital contribution made by each shareholder
  • Evidence of name reservation with the CAC
  • Detailed business plan or feasibility report
  • Draft copy of the company’s MEMART
  • Shareholders agreement providing for disposal or transfer of shares
  • Statement of intent to invest in the company by each investor
  • Detailed manuals and policies.

Upon successful application, where the CBN is satisfied, it shall issue an Approval in principle (AIP) to the promoters of the CGC

Not later than six (6) months after obtaining the AIP, the promoters shall submit an application for the grant of a final license to the CBN. The approval shall be accompanied with the following documents:

  • Licensing fee of N1,000,000.00 (One Million Naira)
  • CTC of the certificate of incorporation
  • CTC of the company’s MEMART
  • Evidence of payment of the stamp duties
  • Evidence of location of the head office
  • Schedule of changes (if any) in the board and shareholding after the grant of the AIP
  • Copies of letters of offer and acceptance of employment of the management team
  • Resumes, valid means of identification and tax clearance certificate (for the past 3 years) of the management staff.
  • Internal control policy
  • Business continuity plan
  • Comprehensive plan on the commencement of the business operation
  • Board and staff training program

Thereafter, the CBN shall conduct an inspection of the premises and the facilities of the company. Upon a satisfactory physical inspection, the CBN shall issue a final license which shall arm the company with the needed approval to successfully operate as a CGC.

Written by Olawunmi Olamide Ojo  for The Trusted Advisors

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