New Nigerian lender aims to help lift struggling economy

THE Development Bank of Nigeria, a new state-backed lender, aims to make up to 20 000 new loans to small firms in its first year of operation as part of efforts to help unlock credit to the recession-hit economy, chief executive Tony Okpanachi said.

Africa’s biggest economy is in its second year of a downturn brought on by low prices for oil, the country’s main export, which has slashed government revenues and hammered the naira currency.

Many businesses have had to shut down or lay off workers to survive.

The new bank – modelled on Germany’s KfW – will lend to commercial banks and micro-finance institutions that will then make loans to small firms, helping boost economic growth and jobs.

Small enterprises make up 60% of Nigeria’s economy.

Okpanachi said the bank would grant loans of up to 12 years’ maturity, longer than usual for the West African country, to enable the financing of new projects that would not be viable with short-term funds and in dollars.

The new bank has the Nigerian government, African Development Bank, European Investment Bank, the World Bank and KfW as initial investors, with start-up capital of $1.3-billion (R17.5-billion).

It aims to start lending in August.

“The focus is on new loans,” Okpanachi, a former Ecobank executive, said.

“Agriculture is a focus area. We will encourage that [and] other small industries.

“We would also try to encourage those sectors that will give maximum impact to the economy.”

The bank’s board was made up largely of non-executive directors appointed through a competitive process to ensure proper corporate governance, he said.