The Central
bank of Nigeria has approved the grant of a Wholesale Development Finance
Institution Licence with national authorization to the Development Bank of
Nigeria (DBN) Plc, the Minister of Finance, Mrs. Kemi Adeosun has confirmed.
The approval
was conveyed in a letter addressed to the Managing Director/Chief Executive of
Officer of DBN dated March 28, 2017. The
letter was signed by the Deputy Governor of the CBN in charge of Financial
System Stability. The approval was subject to meeting the minimum capital
requirement of N100 billion and the reconstitution of the Board of the Bank and
reviewing its organogram.
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.
It could be recalled that the Minister of Finance said
that the DBN will have access to US$1.3bn (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 Bank is also
finalising agreements with the European Investment Bank (EIB).
She 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).
As a wholesale bank, the DBN will lend wholesale to Microfinance
Banks which will on-lend medium to
long-term loans to MSMEs. The 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).
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.
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