Nigerian Bank Lends N70bn To 50,000 Micro, Small, Medium Scale Enterprises

The Development Bank of Nigeria (DBN) on Monday said it has made N70 billion available to over 50,000 Micro, Small and Medium Scale Enterprises (MSMEs) in less than two years.

Dr. Shehu Yahaya, Chairman of DBN, stated this at the maiden edition of the bank lecture series with the theme ‘Surviving to Thriving: MSMEs as the key to unlocking inclusive growth in Africa.

He explained that the bank was established to play a critical role in “promoting growth, jobs, and help address the challenges of poverty” in the country.

“For the DBN, it is early days yet. But we can say that in the first one and a half years of commencement of operation, the bank has lent more than 70 billion naira and impacted on more than 50,000 MSMEs,” Yahaya said.

He noted that surveys by DBN, SMEDAN, the CBN and have identified finance as a major constraint for MSMEs.

“The WB Enterprise surveys have also clearly indicated that SMEs have cited finance as the 1st out of 15 major challenges facing them. Yet, commercial bank lending to MSMEs, already low had further contracted- 48.8% of lending in 1992, down to 5% by 2015.

“This is why the establishment of the DBN is particularly essential so that it can act, along with other DFIs, DMBs and MFBs, to support MSMEs which play a critical role in promoting growth, jobs, and help address the challenges of poverty and inequality.

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“We acknowledge the efforts of the current government to articulate, through the ERGP, the transformation needs, and the implementation of a number of programs, for example through the Social Investment Programs and the agricultural production and value addition programs, to address jobs and poverty.”

Tony Okpanachi, DBN Managing Director, identified access to finance as one of major concerns for the 41.5 million MSMEs which he said exists in Nigeria.

“MSMEs are the largest employers in many low-income countries including Nigeria, yet their viability and growth is restricted by lack of access to long-term debt capital”, he stressed.

Okpanachi said the bank’s mandate is to alleviate financing constraints faced by the MSMEs in Nigeria “through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market conforming and fully financially sustainable basis.

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“MSMEs is the backbone for inclusive economic growth. In advanced economies, small businesses have been seen to be the driving force in achieving growth in all sectors of the economy they operate”.

“Discussion from today’s lecture would help to upscale the capacity of private-finance initiates to lend to MSMEs and improve their capacity across all sectors of the economy to access and use finance efficiently.

“DBN is positioned to play a focal and catalytic role in providing funding and risk-sharing guarantees”, Okpanachi added.

The Keynote Speaker, Dr. Donald Kaberuka, a former President of African Development Bank, noted that MSMEs are the backbone for inclusive economic growth but lamented Nigeria’s difficulties in dealing with them.

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“In advanced economies, small businesses have been seen to be the driving force in achieving growth in all sectors of the economy they operate”, Kaberuka said.

“In many ways, Nigeria is showing a lot of dynamism in this area; from agribusiness, retail and consumer, hospitality, entertainment, small startups in the digital space,” he said.

“I have no doubt that the DBN is off to that trajectory and will be a key factor in unlocking the potential of this great country.”