In a move to build capacity and potentials of Micro, Small and Medium Scale Enterprises (MSMEs) and creating jobs for Nigeria’s growing population, the Development Bank of Nigeria Plc (DBN) has partnered with LAPO Microfinance Bank Limited to provide loan for 10,000 MSMEs.
MSMEs contribute about 50 percent of Nigeria’s Gross Domestic Product (GDP), according to the IFC MSMEs Finance Gap Report of 2017, but only less than 5 percent have access to credit facilities. This partnership will between DBN and LAPO Microfinance hopes to bridge that gap.
Recall that in April, 2018, DBN announced a $70 million equity injection from the European Investment Bank (EIB), and the African Development Bank (AfDB), to strengthen lending for all classes of business in the country.
A breakdown of the fund shows that the EIB will inject $20 million equity stake in the new financing institution, alongside $50 million equity participation from the AfDB.
Also in May, 2018, nine financial institutions were selected by the DBN to handle the intervention fund to entrepreneurs in the MSMEs.
Tony Okpanachi, Managing Director of DBN, had said that the target of the bank was to provide long-term funding to about 20,000 MSME operators in the first year of full operation.
The Development Bank of Nigeria (DBN) was conceived by the Federal Government of Nigeria in collaboration with global development partners like the World Bank, African Development Bank (AfDB), European Investment Bank (EIB), German Development Bank (KfW), and the French Agency for Development (AFD) to address the major financing challenges facing Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria.
DBN was established to alleviate financing constraints faced by MSMEs and small Corporates in Nigeria through the provision of financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
The Nigerian wholesale development financial institution, which was inaugurated by the former president, Goodluck Jonathan, have this objectives:
- To eliminate all obstacles hindering the growth of MSMEs and their ability to generate jobs for Nigeria.
- To alleviate the financial constraints being experienced by operators of small business for rapid and sustainable development.
- To boost socio-economic activities across the country by guarantee long term funding for the MSMEs.