…FG constitutes mgt team
From Uche Usim, Abuja
Hopes of better funding for Micro, Small and Medium Enterprises (MSMEs) in the country brightened yesterday as the Finance Minister, Mrs. Kemi Adeosun, confirmed the completion of recruitment exercise for the executive management team of the Development Bank of Nigeria (DBN), which will take off with $1.3 billion (N396.5 billion).
She said that the bank has formally applied for the issuance of its operational license from the Central Bank of Nigeria (CBN), which may be approved soon.
The DBN was conceived in 2014 by the Goodluck Jonathan administration but suffered delayed take-off for various reasons.
However, the President Muhammadu Buhari administration which inherited the project promised to resolve all outstanding issues, even as it set 2017 as its take-off date.
The DBN will have access to $1.3 billion (N396.5 billion), 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).
To provide clarification, Mrs. Adeosun assured 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 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 per cent of lending from Deposit Money Banks (DMBs),” she explained.
The Minister added that the influx of additional capital to 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,” she noted.