Update: CBN Grants Devt Bank of Nigeria Provisional Licence

Update: CBN Grants Devt Bank of Nigeria Provisional Licence

Sets N100bn Minimum Capital, Reconstitution of Board

More details emerged Wednesday evening on the granting of a Wholesale Development Finance Institution licence with national authorization to the Development Bank of Nigeria (DBN) Plc.

A statement by Salisu Na’Inna Dambatta, Director (Information) at the Ministry, said Minister of Finance, Mrs. Kemi Adeosun confirmed the development.

The approval, conveyed in a letter to the Managing Director/Chief Executive of DBN dated March 28, 2017, signed by the Deputy Governor of the CBN in charge of Financial System Stability, was however subject to meeting the minimum capital requirement of N100 billion, reconstitution of its board and reviewing its organogram.

As a wholesale bank, the bank would undertake wholesale lending to microfinance banks, which would on-lend medium to long-term loans to MSMEs which account for 48.47% of Nigeria’s Gross Domestic Products (GDP), but have access to only a miserly 5% of the loan portfolio of Deposit Money Banks (DMBs).

The Federal Government expects that 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 bank was first mooted in 2014, but its take-off had been fraught with delays, until the President Muhammadu Buhari administration, which inherited the project startd moves to resolve all outstanding issues, setting a target of 2017 for its take-off.

The statement recalled the Minister as sayin that the DBN will have access to US$1.3bn (N396.5 billion) which has been jointly provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).  The Bank is also finalising agreements with the European Investment Bank (EIB).

She also stated that the DBN, will 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).