Answers to Questions on the Development Bank of Nigeria The first round of recruitment of the Executive Management team of the proposed Development B
Answers to Questions on the Development Bank of Nigeria
The first round of recruitment of the Executive Management team of the proposed Development Bank of Nigeria (DBN) has been completed.
What is the Development Bank of Nigeria?
The Development Bank of Nigeria is a wholesale financial institution whose aim is to increase access to finance for Micro, Small and Medium Enterprises (MSMEs) with the help of eligible financial intermediaries (“participating financial institutions”).
When was the Development Bank of Nigeria founded?
The Development Bank of Nigeria was conceived in 2014.
DBN was inaugurated in 2015 by President G. E. Jonathan but due to some delays, it didn’t take off on time.
Which financial institutions will partner with DBN in financing MSMEs?
Nigerian financial institutions with the full set of eligibility requirements stated by the DBN will be qualified to receive funds.
How much funding will the DBN have?
The DBN will have access to US$1.3bn
Who funds the DBN?
The funds to be disbursed by the DBN to its partner banks who will then loan MSMEs will be provided by the Nigerian Federal government, World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).
Also, the DBN was talking with the European Investment Bank (EIB).
Is the DBN a new Development Bank?
No, The DBN is NOT a new Development Bank
As stated above, the DBN had been conceived since 2014 however, it couldn’t take-off due to some delays. The Muhammadu Buhari led government inherited the project and has determined to sort all outstanding issues and let it begin to function from 2017.
Will the DBN affect the Bank of Industry (BoI) and Bank of Agriculture (BoA) negatively?
No, Development Bank of Nigeria’s operations will not in any way lead to the closure of the Bank of Industry (BoI), Bank of Agriculture (BoA) or other existing development banks.
DBN is focused on supporting small businesses defined by size and not by sectors.
The Development Bank of Nigeria will make loans accessible to every sector of the economy – manufacturing, services and other industries not currently served by existing development banks. It will effectively be filling an important financing gap.
Purpose of the DBN?
The main focus of the DBN is MSMEs.
As a wholesale bank, the DBN will lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs.
MSMEs contribute 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).
What will be the positive impact of the DBN on the economy?
The inflow of additional capital and increased tenure of loans from the DBN will:
- Reduce borrowing rates
- Give the required flexibility to manage cash flows
- Providing businesses with the opportunity to make capital improvements
- Provides businesses with the capital to buy equipment or supplies
As the Nigerian economy diversifies, it is growth of the MSME sector will drive the economy by the creation of jobs, financial empowerment and further economic growth.
Who will run and oversee the Development Bank of Nigeria?
With the recent hiring of the management of DBN, sustainability of the bank and the security of its mandate, international best-practice was used in establishing the Bank will be ensured, and will also be used in its continue to run its operations:
- The Development Bank of Nigeria’s management will adhere to strong corporate governance standards
- The management and board will be professionals who are independent and highly qualified.
When is the license expected to be issued?
We have completed and submitted all documentation required for the issuance of the Development Bank of Nigeria’s license to the Central Bank of Nigeria (CBN).