The Federal Government has applied to the Central Bank of Nigeria (CBN) for the issuance of an operational licence to the Development Bank of Nigeria preparatory to its commencement of operations.
This was confirmed in a statement issued by the Director of Information in the Federal Ministry of Finance, Salisu Dambatta, in Abuja on Thursday.
The statement said the ministry had also completed the recruitment exercise for the executive management team of the DBN, adding that it expected the apex bank to grant the licence in no distant time.
The statement read in part, “The Federal Ministry of Finance has confirmed the completion of the recruitment exercise for the executive management team of the Development Bank of Nigeria and has formally applied for the issuance of its operational licence from the Central Bank of Nigeria, which is expected imminently.”
The DBN was conceived in 2014, but its take-off was fraught with delays under the previous administration.
The President Muhammadu Buhari administration had inherited the project with a determination to resolve all outstanding issues and set a target of this year for its take-off.
The DBN will have access to $1.3bn (N396.5bn), which has been jointly provided by the World Bank, German Development Bank, African Development Bank and the French Development Agency.
The statement stated that the DBN was also finalising agreements with the European Investment Bank, adding that its operations would not in any way result in the extinction of the Bank of Industry, Bank of Agriculture or any other existing development bank.
It added, “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 the existing development banks, thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises.”
As a wholesale bank, the statement explained that the DBN would lend to microfinance banks, which will then give medium to long-term loans to the MSMEs.
The MSMEs contribute about 48.47 per cent to Nigeria’s Gross Domestic Products but have access to only about five per cent of available lending opportunities from the Deposit Money Banks.
The statement added that the influx of additional capital from the DBN would lower borrowing rates, adding that the longer tenure of the loans would provide the required flexibility in the management of cash flows.
This, it added, would give 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,” it added.
