To Co-exist With BoI, BoA, Others
The Federal Ministry of Finance, on Thursday said it has completed recruitment of Executive Management team of the Development Bank of Nigeria (DBN), following which a formally application for the issuance of operational license has been sent to the Central Bank of Nigeria (CBN).
Unlike these other development banks, DBN is expected to “provide loans to all sectors of the economy, including manufacturing, services and other industries not currently served by existing development banks thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises (MSMEs),” in line with the desire of the President Muhammadu Buhari administration.
In a statement by Salisu Na’Inna Dambatta, Director (Information), the Ministry clarified that the DBN is not intended to take over the operations of the Bank of Industry (BOI), Bank of Agriculture (BOA) or any other existing development bank in any way, contrary to plans by the Senate to fuse the agencies together.
The bank, conceived in 2014, is expected to access the US$1.3 billion (about N396.5 billion) jointly provided by the World Bank, German Development Bank (KfW), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency). Agreements with the European Investment Bank (EIB) are also in the final stages.
“The operations of the DBN is clearly distinct from other development banks as it is focused on supporting small businesses defined by size and not by sectors,” the Ministry said, adding that being a wholesale bank, it will lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs.
“The MSMEs contribute about 48.47 percent to the Gross Domestic Products (GDP) of Nigeria but have access to only about 5 percent of lending from Deposit Money Banks (DMBs),” the statement added.
The influx of additional capital from the DBN will lower borrowing rates and the longer tenure of the loans, will provide the required flexibility in the management of cash flows, giving businesses the opportunity to make capital improvements, and acquire equipment or supplies.
The Ministry expressed hope that as the economy diversifies, the growth of the MSME sector will have a positive impact on the economy through employment generation, wealth creation and economic growth.