Development Bank of Nigeria gets operational licence soon
All seems set for the takeoff of the Development Bank of Nigeria (DBN) as the Federal Ministry of Finance has confirmed the completion of the recruitment exercise for the Executive Management team.
The ministry has also formally applied for the issuance of its operational license from the Central Bank of Nigeria (CBN), which is expected imminently.
The DBN was conceived in 2014. However, its take-off had been fraught with delays. The Muhammadu Buhari administration inherited the project with a determination to resolve all outstanding issues and set a target of 2017 for its take-off.
The DBN will have access to N396.5 billion which has been jointly provided by the World Bank, KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency). The bank is also finalizing agreements with the European Investment Bank (EIB).
To provide clarification, the operations of the DBN will not in any way, result in the elimination of the Bank of Industry (BOI), Bank of Agriculture (BOA) or any other existing development bank as the operations of the bank is clearly distinct from other development banks as it is focused on supporting small businesses defined by size and not by sectors.
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).
As a wholesale bank, the DBN will lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs. The MSMEs contribute about 48.47 per cent to the Gross Domestic Products (GDP) of Nigeria but have access to only about 5 percent of lending from Deposit Money Banks (DMBs).
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.
