Development Bank of Nigeria set to resume operation with N396.5bn
After three years of back and front, preparations are currently at final stages for the take off Development Bank of Nigeria (DBN) idealized since 2014.
Already, the Federal Ministry of Finance last week applied to the Central Bank of Nigeria (CBN), for the operational licence of the new financial institution designed to power growth and consolidation of budding businesses and entrepreneurs.
In a statement, the Director of Information in the Ministry of Finance, Alh. Salisu Na’Inna confirmed that the recruitment exercise for the Executive Management team of the bank has been completed and modus operandi of the bank had been designed in a way and manner its activities will not run parallel with other development financial bodies and agencies of the government.
Business Hilights recalls that the DBN was conceived in 2014, but could not take off due to logistics and politics of directorship which has been resolved by the present administration.
A source in the Ministry confided in our correspondent that the government was serious in establishing the bank in other to unlock the 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) for the operation since 2014.
Na’Inna confirmed further that “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. 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 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 percent to the Gross Domestic Products (GDP) of Nigeria but have access to only about 5 percent of lending from Deposit Money Banks (DMBs).”
A key expectation from the ministry on the planned resumption of banking services by DBN is that “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”.
“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.”
