Ndubuisi Francis and Udora Orizu in Abuja
The newly-established wholesale development finance institution -Development Bank of Nigeria (DBN) has commenced lending activities with N5 billion earmarked for disbursement through three microfinance banks (MFBs).
The amount is for onward lending to over 20,000 micro small and medium scale enterprises (MSMEs) spread across the country.
The three MFBs for the pilot scheme, who were unveiled at an agreement-signing ceremony in Abuja on Moday, were Fortis Microfinance Bank Plc, LAPO Microfinance Bank limited, and NPF Microfinance Bank Plc.
At the event, DBN’s Managing Director/ Chief Executive Officer, Mr. Anthony Okpanachi said he was excited at the bank’s ability to meet its mandate.
He said: “Today, DBN is proud to commence with the first of its mandate. The Nigeria economy is powdered by the MSMEs , however unstructured. The activities within this segment account for over 50 per cent of Nigeria’s GDP.”
However, he observed that less than five per cent of these businesses have access to credit in the financial system, adding that statistics show that there are over 37 million MSMEs in Nigeria.
According to him, regardless of the number, many of these businesses still struggle with access to adequate financing.
Okpanachi stated that that unlike other development finance institutions (DFIs) that are sector-specific, DBN loans cut across all sectors, adding that the bank “seeks to achieve the Nigerian Sustainable Banking Principles (NSBP) of the Central Bank of Nigeria (CBN), where financial inclusion ranks high, as well as the United Nations Sustainable Development Goals”.
He stressed that this was consistent with the Economic Recovery and Growth Plan of the federal government.
Giving an insight into the terms and conditions for the loan, Okpanachi said the bank’s loan repayment tenure is flexible (up to 10 years with a moratorium period of up to 18 months ), adding that the pricing is pragmatic and referenced to market rates.
He also spoke provision for loans recovery, noting that the bank had been structured in such a way to recover loans without the hassles experience by past DFIs.
Okpanachi added: “We are a wholesale bank, we are lending through PMIs (primary microfinance institutions) to ensure the end borrowers are able to pay back the loans. The N5billion is what we are making available to three of them and that is start off. The N5 billion cuts across the three microfinance we are starting off with.”
In his remarks, the Managing Director of LAPO Microfinance Bank, Mr. Godwin Ehigiamusoe applauded DBN’s intervention in the MSMEs’ sector.
He noted that the initiative was one the sector that has been waiting for, adding that the need in that sector was huge and diverse.