- Development Bank Releases N5bn to Three MfBs
The Development Bank of Nigeria, which was recently established by the Federal Government, on Monday commenced lending activities to the economy with the release of N5bn to three microfinance banks.
The amount is for on-lending by the microfinance banks to 20,000 entrepreneurs operating in Micro, Small and Medium Enterprises sector of the economy.
The three institutions that got the first set of loan disbursement are Fortis Microfinance Bank Plc, LAPO Microfinance Bank Limited and NPF Microfinance Bank Plc.
Speaking at the event, the Managing Director, DBN, Mr. Tony Okpanachi, said the disbursement of the fund would catalyse activities of entrepreneurs in that segment of the economy.
He stated that the release of the fund was in line with the decision of the bank to fulfil its three mandates of lending to MSMEs, provision of partial guarantees to financial institutions and capacity building.
According to him, unlike other Development Finance Institutions that are sector-specific, the DBN’s loans will cut across all sectors as the bank seeks to help in achieving the Economic Recovery and Growth Plan of the Federal Government.
Okpanachi described the loan repayment period of the fund as long as the bank could offer up to 10 years with a moratorium period of up to 18 months.
He said, “The DBN was set up as a wholesale development finance institution to provide sustainable financing through eligible participating institutions, which will in turn lend to MSMEs for the development of that segment.
“Statistics show that there are over 37 million MSMEs in Nigeria. However, regardless of the number, many of these businesses still struggle with access to adequate financing.”
He lamented that while the Nigerian economy was powered by MSMEs as their activities accounted for over 50 per cent of the country’s Gross Domestic Product, less than five per cent of them had access to credit in the financial system.
Okpanachi added, “With an increasing educated demography graduating from tertiary educational institutions coming home to meet limited vacancies in the job market, and a corresponding number in the Diaspora returning to Nigeria to create value, solve problems and start businesses, the time for the DBN is now.
“Existing financing options are inadequate to address the demands of the segment. It is against this context that the DBN loan will provide sustainable financing to Nigeria’s MSME segment.”
He said going forward, more financial institutions, including commercial banks, would be signed on to access the DBN loans.
This, he noted, would be made available to MSMEs, which were already customers of the financial institutions across the nation.
The Managing Director, Fortis MfB, Mr. Tiko Okoye, said the benefitting microfinance banks would work with the DBN to achieve its mandates.
“There are a lot of micro economic activities going on in the MSME sector and this fund will help boost industrialisation,” he stated.