The Federal Ministry of Finance has confirmed the completion of the recruitment of the Executive Management team of the proposed Development Bank of Nigeria (DBN).
The bank has therefore formally applied for the issuance of its operational license from the Central Bank of Nigeria (CBN), which is expected imminently, a statement by the Ministry of Finance, said on Thursday.
The DBN was conceived in 2014, but its take-off had been fraught with delays.
The Muhammadu Buhari led administration inherited the project 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).
The operations of the DBN will not result in the elimination of the Bank of Industry (BOI), Bank of Agriculture (BOA) or any other existing development bank, the statement signed by Salisu Dambatta, director of Information, said.
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 statement said.
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.