—To have access to additional N369 billion for on lending to all sectors
Finally, the Federal has given impetus to the development of the country with approval of operational licence for the Development Bank of Nigeria (DBN), with initial capital base of N100 billion.
Apart from the capital base, DBN is to have access to additional funds amounting to over N396.5 billion ($1.3 billion).
The amount had 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).
Minister of finance confirmed these on Wednesday, saying that the DBN would 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).
She said that CBN’s approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017.
According to a statement by the Director of information, Salisu Dambata, the letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability subject to meeting the minimum capital requirement of N100 billion, the reconstitution of the Board of the Bank and reviewing its organogram.
The DBN was conceived in 2014, but its take-off had been fraught with delays until President Muhammadu Buhari led administration inherited the project with a determination to resolve all outstanding issues and set a target of 2017 for its take-off.
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 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 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.