James Emejo in Abuja
A Professor of Finance and Capital Market at the Nasarawa State University, Keffi, Prof. Uche Uwaleke has said the Development Bank of Nigeria (DBN) is currently well suited to serve the real sectors of the economy “since commercial banks are profit oriented and the real sectors which are growth drivers are highly risky”.
Speaking in a chat with THISDAY, He said the importance of a strong Development Bank to the Nigerian economy cannot be overstressed.
He added: “The experience of many emerging economies especially the Asian Tigers illustrates the critical role of these specialised banks in funneling credit to the real sector.
“At present, a few banks in Nigeria are performing these roles. These include the Bank of Industry and Bank of Agriculture. But these banks are grossly undercapitalised. Their functions also overlap.”
The Managing Director, DBN, Mr. Tony Okpanachi recently said the bank had signed on at least 35,000 Micro Small and Medium Enterprises (MSMEs)/end borrowers within its first full year of operation.
He added that the number translated to a 75 per cent increase over the 20,000 MSMEs projection earlier announced for the year, stressing that the development further underscored the significant progress which the institution had made since it commenced formal lending activities in October 2017.
Other analysts who spoke to THISDAY further stressed need for DBN to put in more presence at various geopolitical zones of the country if they are to make the desired impact especially on SMEs within short period of time.
However, Okpanachi added that the milestone recorded reinforced other positives that have been notched up by the institution.
These, according to him, included the planned establishment of a subsidiary which would be responsible for providing partial credit guarantees to lenders.
The unit would begin operation with $35 million in start-up funding in 2019- seeking to provide 50 percent guarantees for all credit disbursed through DBN and the funding will be increased as the unit takes on more portfolios.
The DBN has further reached agreement with 19 participating finance institutions (PFIs) and has strong focus on development objectives such as job creation and poverty alleviation is supported by a strong, confidence boosting world class governance structure which has clear reporting standards.