THE much anticipated Development Bank of Nigeria, DBN, will take off next month with $323 million (about N64 billion) capital base.
A breakdown of the figure shows that African Development Bank, AfDB, is supporting the DBN operation with $258.5 million, African Development Fund, ADF, $32, 590,000 and Delta $32,036,874, totaling $323.2 million or over N64 billion.
Investigations by Vanguard reveals that the proposed bank, an initiative of the past administration, was launched in March 2015 in Abuja but could not take off due to change in government and it is now ready to start operation from July 2016.
The DBN is a financial inclusion that will bridge the gap between the Bank of Industry and other commercial banks that could not satisfy the funding needs of Micro, Small and Medium Enterprises, MSMEs in the country. The principal mission of the bank is to increase financial inclusion by providing access to credit finance.
Also, the DBN will support medium to long-term lending to the MSMEs, with duration of up to 10 years and a moratorium of up to 18 months. This would enable borrowers in the sectors have a lengthy period to repay the loans from DBN unlike the Deposits Money Banks, DMBs.
Vanguard learned that the journey to set up the bank started in 2013 when the federal government set up a working group under the National Council on Privatization (NCP).
The working group came up with the recommendation, in addition to several other recommendations, that Nigeria needs a strong Development Finance Institution that will further open up access to finance for our micro, small and medium enterprises.
All over the world, development banks are set up to provide long-term finance (debt or equity) which commercial banks and the capital market cannot, or will not provide. Aside the development of small businesses and the encouragement of entrepreneurial activity, the broader aim of Development banks include the redistribution of income between social classes, diversification of industry, and of course, job creation.
Also, the Ministry of Finance stated that 20,000 beneficiaries would be given loans during the bank’s first year of operation.