SMEs: Development Bank to start lending before year end

Mr. Tony Okpanachi, Managing Director/CEO of Development Bank of Nigeria (DBN) has said the bank will start lending to partner banks for onward lending to micro, small and medium scale enterprises before the year ends.

Mr. Okpanachi spoke to correspondent exclusively at sidelines of the ongoing economic summit in Abuja.

DBN is a wholesale bank licensed in March 2017. It won’t be lending directly to individuals but to commercial banks and microfinance banks which will lend to the benefiting SMEs. The SMEs will be getting the our the 23rd money in their local areas but at a much lower interest rate than the microfinance banks are currently able to do. The reasons the microfinance and commercial banks are lending expensively is because they don’t have access to long term funds.

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).

At least 20,000 micro, small and medium scale enterprises (MSMEs) will benefit from DBN loans in the first one year of its existence, the MD had projected.

“In derisking the SMES, we will provide partial credit guarantee scheme to financial institutions that want to lend. If they want to lend but they feel the business is a bit risky, we will share the risks with them up to 50 percent to encourage them to lend,” he said.

The DBN will serve every small business unlike Bank of Industry and Bank of Agriculture with specific targets. They are structured along one sector.

DBN is coming with as long as 10 years funding. That hasn’t happened before in the country. It will also create an opportunity for moratorium on the funds so at the end, SMEs might have funds of up to 12 years tenure.