ABUJA – March 23, 2015 (NAN) President Goodluck Jonathan, on Monday in Abuja inaugurated the Development Bank of Nigeria (DBN) in furtherance of his administration’s desire to revolutionise small businesses in the country.
Speaking at the event, Jonathan expressed optimism that the bank would eliminate all obstacles hindering the growth of Micro, Small and Medium Enterprises and their ability to generate the much needed jobs for the country.
According to him, the DBN, which is a private sector driven financial institution, is meant alleviate the financial constraints being experienced by operators of small businesses for rapid and sustainable national development.
“This launch of a brand new financial institution, the Development Bank of Nigeria (DBN), represents a defining milestone in our administration’s efforts to empower more micro, small and medium enterprises across our land.
“MSMEs form the backbone of the Nigerian economy; the men and women who own and operate them are true reflections of the strong Nigerian spirit of enterprise and the vigorous work and ethics that define us as a nation and a people.
“Our recent GDP re-basing exercise confirmed the importance of MSMEs sector to our national economy.
“Currently Nigeria has over 17 million of these businesses, which contribute over 45 percent of our GDP and employ about 66 per cent of our labour force.
“Today we celebrate these great men and women, who keep our communities ticking with the impact of their hard work and practical ingenuity.“
Jonathan acknowledged the support of the nation’s development partners such as the African Development Bank (ADB); the World Bank; Agence Francaise de Development (afd), and KFW Entwicklungs Bank of Germany, saying that DBN would be a success story for Africa
He said the government would ensure financial discipline and the adoption of international best practices in the operation of the bank.
“We are pleased that the DBN will not go the way of similar established institutions because of the participation we are getting not just about government putting money, but money from the private sector and especially from our development partners.
“We know that the ADB is a success story but our DBN will be a major success story for Africa,“ he said.
He said that the bank would operate as a self-sufficient institution that would not rely on government subsidy, but source for funds to run its operations and also leverage on the existing structure of the financial sector.
He said: “Now is the time for us to achieve a rounded economic growth that will impact the lives of Nigerians.
“The MSMEs sector will be properly and strategically stimulated in a manner that is sustainable.“
According to the President, the challenges faced by the sector should be addressed in order to harness the benefits of development in terms of growth both in GDP and employment as well as leading the way for industries of the future.
He expressed the hope that DBN would stimulate “strong growth“ in agriculture, manufacturing and among the micro, small and medium enterprises.
The President also expressed happiness that YouWin winners would look up to DBN to sustain the programme in terms of expansion.
The Minister of Finance, Dr Ngozi Okonjo-Iweala, said the bank would boost socio-economic activities across the country as it would guarantee long tenure funding for the Small, Medium Enterprises (SMEs),
Okonjo-Iweala said that such businesses would have a grace period of five years before they would begin to repay the facilities.
The Governor of the Central Bank of Nigeria (CBN), Mr Godwin Emefiele, said one of the objectives of DBN was to lend to specialised institutions such as the Bank of Industry, Bank of Agriculture and commercial banks for onward lending to SMEs.
According to him, the system will support medium to long-term lending, loans with duration of up to 10 years, and moratorium period of up to 18 months to give MSMEs adequate grace period before they would start to repay.
He said it would also allow them to match loan terms with longer term investment cycles.
He said DBN had been registered as a publicly sponsored private institution.
“Shareholders are Federal Government and African Development Bank. Other institutions and social enterprises have expressed interest to participate in equity and these will be considered and brought in due course.
“DBN will be adequately capitalised, it will commence operations with a start-up capital of $1.5 billion (or N300 billion), and we expect the capital to increase to $5 billion (or N1 trillion) in the medium term and ultimately to N2 trillion within 10 years.“[pro_ad_display_adzone id=”10″]
According to Emefiele, in its first five years of operation, DBN is expected to disburse more than 200,000 new loans to MSMEs, with each SME creating an average of five new jobs.
“We expect that DBN will result in one million direct jobs being created as well as several more indirect jobs.
“In the same time period, the DBN alongside its partners will also provide hands-on business training for over one million MSMEs, making them more bankable and thus more attractive for commercial bank lending.
“We expect that the contribution of MSMEs to Nigeria’s GDP will increase from the current 45 per cent given MSMEs increased access to finance, access to quality financial education and access to markets,’’ he added.
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The Minister of Trade, Industry and Investment, Dr Olusegun Aganga, disclosed that DBN would impact the lives of Nigerians.
Mr Solomon Asamoah, the Vice-President, African Development Bank (ADB), said DBN would contribute to closing funding gaps for Nigeria’s SMEs and also help to create jobs. (NAN)