It has been announced that The Central Bank of Nigeria (CBN) has given approval granting a Wholesale Development Finance Institution Licence with national authorization, to the Development Bank of Nigeria (DBN) PLC. According to a statement by Nigeria’s Minister of information, Mrs Kemi Adeosun on her official twitter account, (@HMKemiAdeosun, 29/3/17), the approval was conveyed in a letter addressed to the Managing Director/Chief Executive Officer of DBN which dated March 28, 2017. The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability.
The statement continued that the approval was based on meeting the minimum capital requirement of N100 billion and the reconstitution of the Board of the Bank and reviewing its organogram. The statement recalled that The DBN was conceived in 2014, but that its take-off had been laden with delays and that the President Muhammadu Buhari led administration inherited the project with a mind-set to resolve all outstanding issues and set a target of 2017 for its take-off.
It is envisaged 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).
It is also expected that The DBN will provide loans to all sectors of the economy including, manufacturing, services and other industries not served by existing development banks at the moment, thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises (MSMEs). The DBN as a wholesale bank, will lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs, which currently contribute about 48.47 percent to the Gross Domestic Products (GDP) of Nigeria but have access to only about 5 per cent of lending from Deposit Money Banks (DMBs).
Mrs Adeosun stated, “We expect 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”.
This appears a good development for Nigeria, manufacturers, MSMEs and all sectors of the economy, and we wish all stakeholders a worthwhile business relationship. We must therefore be at the right place at the right time and for the right purpose. We also need to ask the right questions from the right sources. The time to think and act is now; these are life and business essentials, so let’s keep thinking clearly! Thank you for reading and do have a beautiful day!
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