The Development Bank of Nigeria (DBN) has begun operations with a N5 billion loan to Macro and Small Medium Enterprises in the country. Managing Director of the bank, Tony Okpanachi disclosed this recently in Abuja
Interest rate on the loans
Okpanachi also disclosed that the loans would be given at interest rates in line with prevailing macro economic realities, but trend lower if rates dropped.
“rates will be bench marked against the current macroeconomic rates, so as the macroeconomic situation improves and the rates are going down, our rates too will go down unlike when we come out with fix rates irrespective of whatever the macroeconomic situation is.”
Okpanachi also disclosed that the loans would have a repayment tenure of up to 10 years and were
disbursed through three microfinance banks with a National spread: Fortis Microfinance bank, Lapo Microfinance bank and NPF Microfinance bank.
Ghosts of the past
Perhaps to allay fears that the model would go the way of previous attempts, Okpanachi said the agency had learnt from previous mistakes, and was working on being sustainable.
“In crafting DBN, lessons were learnt from the past experiences of Development Finance Institutions (DFIs) over the last 50 years. The idea behind DBN is to have an institution that will be self sustaining so that eventually, it can go to the market, both local and international to raise funds and continue its business. The issue of subsidy which is not sustainable is not part of the business model
The development bank was conceived in 2014 by the Goodluck Jonathan administration. The banks focus is lending to Medium and Small scale Enterprises (MSMEs). Funding partners for the bank include the World Bank, Kfw development bank of Germany, African Development Bank (ADB) and the French Development Agency (FDA).