The Central bank of Nigeria has granted the Development Bank of Nigeria (DBN) Plc.a national license as a Wholesale Development Finance Institution.
By reason of the licence, the DBN can lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs.
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).
A statement from the federal ministry of finance Wednesday said the approval was conveyed in a letter addressed to the Managing Director/Chief Executive of Officer of DBN dated March 28, 2017 and signed by the CBN Deputy Governor in charge of Financial System Stability.
Granting the license the statement noted was subject to the bank meeting the minimum capital requirement of N100 billion and the reconstitution of the Board of the Bank and the review of its organogram.
It would be recalled that the Minister of Finance Mrs Kemi Adeosun had disclosed in the past that the DBN will have access to US$1.3 billion (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 DBN is also finalising agreements with the European Investment Bank (EIB).
Adeosun had also stated that 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).
“The Federal Government expects that 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” the statement from the ministry said.
The DBN, was conceived in 2014 however, its take-off had been fraught with delays. The President Muhammadu Buhari led administration inherited the project with a determination to resolve all outstanding issues and set a target of 2017 for its take-off.