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.
I WANT TO START A SMALL MEDIUM SCALE BUSINESS ON FROZEN FOODS. HOW DO I GET FUND.
All these micro finance don’t make it easy for people to be able to access the fund, also their requirements and the interest rates are on high side, like me I have block industry I have tried all my possible best to get loan to but it doesn’t work out because of the interest rates and at times the requirements
DBN needs to go beyond making cheap rate funds available to Microfinance and other lending institutions because the on-lend to SMEs are very expensive rates thereby defeating the purpose of the fund. I think creative ways should be developed for instance, talk with the SMEs as a body, monitor the allocation of the funds to ensure they are learnt to the target SMEs at low rates and build communication bridge between SMEs and DBN directly. This way, the intention of the funding initiative will be achieved, otherwise it will go the way of other funds.www.steepleglobal.com.ng/blog