President Goodluck Jonathan on Monday inaugurated the first in history Development Bank of Nigeria with a capital base of $1.5bn (about N300bn).
According to the President, the new bank will support medium to long-term lending to Micro, Small and Medium-scale Enterprises, with duration of up to 10 years and a moratorium period of up to 18 months which is to enable the MSMEs a grace period before they will start repaying the loans.
Apart from Nigeria, the bank is being supported by development partners such as the African Development Bank, World Bank, Agence Francaise de Development, and KFW Entwicklungsbank of Germany
Going by the projection of the Federal Government, the capital base of $1.5bn (about N300bn) is expected to increase to $5bn (about N1tn) in the medium-term and to N2tn within the next 10 years.
The President explained that the first five years of operation of the bank, about 200,000 new loans are expected to be disbursed to MSMEs.
With each MSME creating an average of five new jobs, the government is projecting that the bank will assist in creating one million direct jobs.
The DBN, in collaboration with the development partners, is also expected to provide business training for over one million MSME operators in order to make their businesses more attractive for commercial bank lending.
Jonathan described the occasion as a milestone in his administration’s efforts to empower MSMEs, which according to him, are the backbone of the Nigerian economy.
He described those operating small scale businesses as true reflections of the country’s strong enterprise.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, explained that the establishment of the bank would guarantee a robust financing for MSMEs.
She said that about 20,000 beneficiaries would be offered loans in the first one year of the bank’s operation.
Okonjo-Iweala said, “I share in the President’s belief that the most valuable change we can make as a government is ensuring that we break this jinx so that small businesses can actually have a full-fledged institution that will provide this access.
“Not just access, but access in a manner that does not stifle them, but instead grows them; access that gives them space to afford a decent life, while nursing their businesses; access in a manner that will not take substantial portions of their profits away from them; access to the sort of finance that empowers them and their communities.
“Simply put, access to credit means financial inclusion; financial inclusion helps convert people’s dreams to reality. This is the reason why we are here today, this is the reason why the President is also here to launch the flagship bank that gives all Nigerians a chance not only to dream, but to also see that the dream becomes a reality.”
The Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said in the last four years, over N400bn loans had been disbursed by the Bank of Industry to businesses in the country.
The Vice President, AfDB, Solomon Asamoah, who spoke on behalf of donor agencies, said the new bank would help address funding gaps for Nigerian MSMEs.
The Governor, Central Bank of Nigeria, Mr. Godwin Emefiele, said the bank would support the DBN to channel funds to the MSME sector.
Meanwhile, President Jonathan used the opportunity of the bank’s inauguration to unveil a document entitled: ‘Jonathan’s next four years: My vision for a Nigeria that works for all’.
The document, he said, contained his plan to build on the platform his administration had laid in the last four years to deliver growth, prosperity, peace and justice for all.
