The Development Bank of Nigeria (DBN) has about $1.3 billion (over N400bn) funds to draw from to lend to Micro, Small and Medium Enterprises (MSMEs), its managing director/CEO, Mr. Tony Okpanachi, has said.
The funds comprise investment from the Federal Government of Nigeria and global development partners like the World Bank, African Development Bank, KfW Development Bank, French Agency for Development Bank, and European Investment Bank.
DBN provides wholesale term funding and risk-sharing facilities to Participating Financial Institutions (eligible retail intermediaries such as commercial banks, microfinance banks, retail DFIs and leasing companies) for on-lending to MSMEs.
Mr. Okpanachi, at an interactive session with finance journalists in Abuja, explained that DBN will only have access to the funds on demand.
"I can assure you that we have enough funding now, about $1.3 billion that we can draw from" he said adding that for years to come, DBN would have sufficient funds to lend to the Participating Financial Institutions (PFIs) for on-lending to MSMEs.
The DBN CEO also explained at even the PFIs were not given the funds in lump sum as they would also draw from their allocations on demand.
"We have a mechanism within our system that ensures that the funds hit the accounts of the end borrowers within 72 hours. Beyond that, we follow up on them to see the impact made by the borrowing. For example, we check if it had created more employment; increased turn over, has it increased revenue or enabled them pay more taxes when necessary; we look out for all of these. So we don't just create the lines for the banks alone," he stated.
He also said funds available to eligible PFIs for on-lending to MSMEs now stand at N9 billion.
Recall at the commencement of the disbursement exercise in October 2017 in Abuja, DBN disbursed N5bn to three micro finance banks (LAPO Microfinance Bank, Fortis Microfinance Bank, and NPF Microfinance bank). The PFIs were the first set to have met the criteria to access the loan.
However, DBN has signed more PFIs. They are: Wema Bank, Eco Bank, Sterling Bank, Diamond Bank and Fidelity Bank, these are the commercial banks. For the microfinance banks, the new ones are Microcred Microfinance Bank Nigeria Ltd, AB Microfinance Bank Nigeria Ltd, and Infinity Microfinance Bank Ltd.
Mr. Okpanachi also assured that by the end of June 2018 more commercial banks would have been qualified to draw from the funds for on-lending to MSMEs.
On de-risking the industry and providing capacity to PFIs, he explained that the process is on-going. "If you recall we have a unit with the ministry called the project implementation unit, the idea is to have different units handling the capacity building issues so that we are not distracted from the core mandate of lending."