FG Eyes $10bn for Wholesale Development Bank of Nigeria

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  • Woos EU Investors

Finance Minister Ngozi Okonjo-IwealaThe Federal Government is targeting $10billion capital base for the proposed Wholesale Development Bank of Nigeria.The Minister of Finance, Dr. Ngozi Okonjo-Iweala, who disclosed this in an interview with Bloomberg TV Africa, said the bank would start off with about $2 billion, with financial support from the World Bank and Africa Development Bank, among others.

She said the bank was a product of public-private partnership, as it is being supported by the government but registered and run by the private sector.

Okonjo-Iweala said, “It is very difficult for business people, especially small and medium enterprises to find any money for five to seven years; at most, they can borrow for a year to three years.

“If you want to build a sustainable business and you want your economy to have sustained growth, you have got to fix access to finance, not just for running the company but also for longer-term investment.

“That is why we are building the Development Bank of Nigeria. And the ultimate drive, or dream, or vision is to capitalise it up to $10 billion, but we are going to start with about $2 billion and we will go up to $5 billion. The institution is going to get strong and get rated, and it will be able to float its own money and have very strong capitalisation.”

Expressing excitement about the prospects of the institution, the minister said the government was being assisted by the World Bank, AfDB, KfW of Germany, BNDES of Brazil, and the Development Bank of South Africa.

“The money comes from four sources, the government, the World Bank (that is putting in $500m), the African Development Bank (which is contributing $500 million and which has actually taken an equity stake in the institution, which is unusual), and the KFW of Germany,” Okonjo-Iweala further said.

Meanwhile, federal government has invited the European Union (EU), to invest in the proposed Nigeria Development Bank through the union’s development financing outfit, the European Investment Bank (EIB).

A statement by the Finance Ministry on Sunday quoted the Minister of State for Finance, Ambassador Bashir Yuguda, to have made the plea while receiving a delegation of the union led by the EU Ambassador to Nigeria, Michel Arrion.

Yuguda also said the proposed bank had raised significant interest among global funding agencies like the World Bank, which had pledged $500m, other development oriented financial institutions like the AfDB.

The minister told the delegation that the federal government was establishing the bank with a view to making cheap, long-term funds available to the Small and Medium Enterprises, SME, to boost productivity in that sub-sector of the economy.

His words, “we are developing a whole sale development bank in Nigeria. The idea of the bank is to give long term financing to SMEs and increase their source of borrowing. We did a study of the informal sector, which showed that the sector constituted 45 percent of our GDP.

“We have a firm belief that if we are able to increase their access to funds especially long term, that will go a long way in increasing the GDP of this country and integrating them into the formal sector of the economy.”

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