CBN Okays Establishment Of Development Bank Of Nigeria

The Central Bank of Nigeria, CBN, has approved the establishment of the Development Bank of Nigeria (DBN) Plc.
Finance Minister, Kemi Adeosun said the approval was conveyed in a letter addressed to the Managing Director/Chief Executive Officer of DBN dated March 28, 2017. The letter was signed by the Deputy Governor of the CBN in charge of Financial System Stability. The approval was subject to meeting the minimum capital requirement of N100 billion, the reconstitution of the board of the bank and review of its organogram.
The Minister recalled that although the idea of DBN was conceived in 2014, its take-off had been fraught with delays. President Muhammadu Buhari’s administration inherited the project with a determination to resolve all outstanding issues and set a target of 2017 for its take-off.CBN
Adeosun explained that the bank will have access to US$1.3bn (N396.5 billion) which has been jointly provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency).  The Bank is also finalising agreements with the European Investment Bank (EIB).
She also stated that the DBN, will provide loans to all sectors of the economy including manufacturing, services and other industries not currently served by existing development banks thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises (MSMEs).
“As a wholesale bank, the DBN will lend wholesale to Microfinance Banks which will on-lend medium to long-term loans to MSMEs. The MSMEs contribute about 48.47 per cent to the Gross Domestic Products (GDP) of Nigeria but have access to only about five percent of lending from Deposit Money Banks (DMBs).
“The Federal Government expects that the influx of additional capital from the DBN will lower borrowing rates and the longer tenure of the loans, will provide the required flexibility in the management of cash flows, giving businesses the opportunity to make capital improvements, and acquire equipment or supplies,” the ministry said.

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