Good news as Development Bank of Nigeria takes off this year

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Good news as Development Bank of Nigeria takes off this year

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The Development Bank of Nigeria (DBN) is set to take off as the Federal Government has concluded the selection process of the executive management team of the development financing institution and has equally applied for an operating license from the Central Bank of Nigeria (CBN).
Development Bank of Nigeria

Development Bank of Nigeria

The team, however, would unveil the team at a briefing next week by the Finance Minister Kemi AdeosunThe DBN, was conceived in 2014 however, its take-off had been fraught with delays with the current administration last year promising to resolve all outstanding issues and set a target of 2017 for its take-off.The $1.3 billion (N396.5 billion) Development Bank of Nigeria is jointly funded 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) for more investment. The DBN’s major mandate is to spur growth through financing of projects, particularly the medium, small and medium scale industries.Director of Press in the Federal Ministry of Finance, Alhaji Salisu Dambatta said: “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).”Dambatta also said that as a wholesale bank, the DBN would lend wholesale to microfinance banks, which would provide 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).Dambatta further clarified that the operations of the DBN would not in any way result in the elimination of other sectoral development financing institutions like the Bank of Industry (BOI), Bank of Agriculture (BoA) or any other existing development bank.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.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.The Federal Ministry of Finance has confirmed the completion of the recruitment exercise for the Executive Management team of the Development Bank of Nigeria (DBN), and has 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 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.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).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. 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).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.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 growthSource: Government Agencies

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