The micro, small and medium scale enterprises (MSMEs) space of the Nigerian economy will witness a major boost this year as the Development Bank of Nigeria (DBN) will channel N70 billion long term funding into the sector.
The DBN was set up with the aim of alleviating financing constraints faced by MSMEs and small corporate in the country. This is achieved by providing financing, partial credit guarantees and technical assistance to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.
The bank began operations October 2017 and set a target of N30 billion loan disbursement in the first year.
Presenting the scorecard of the bank’s performance in the first year in Lagos Thursday, the Managing Director of DBN, Mr. Tony Okpanachi disclosed that the bank exceeded its projection and disbursed N31.36 billion to 35,000 MSMEs.
According to him, the bank is targeting N70 billion disbursement this year. Okpanachi stated that the DBN formally commenced lending operations in October 2017 to its first two Participating Financial Institutions(PFIs), which were microfinance banks.
He explained that with a strong on-boarding exercise it carried out within the year, the bank currently has a total of 29 PFIs which include commercial banks at various stages of engagement.
“Our total disbursement-to-date stands at N31.364 billion thus exceeding our year end projection of N30 billion. Total number of end borrowers stands at 35, 000 which also exceeded our year-end target of 20,000 MSMEs,” he said, adding that “Women accounted for 73 per cent of the end-borrowers of the DBN loans and received 27 per cent of the total amounts disbursed.”
Encouraged by the achievement recorded in the first year, the DBN boss said the bank’s disbursement target for the year 2019 is N70 billion, which he stressed would to help deepen the bank’s penetration in the MSMEs sector of the economy.
Opanachi stated that the bank is not sector specific in its funding activities.
“We are not sector-specific and as long as you have the potential to create employment, you have potential to empower and make development impact, DBN will fund you.
“We also know that some sector have more growth potential so as we go down we try to encourage those sectors,” he said.
Speaking on interest rate, he said with time, borrowers will enjoy a single digit interest rate.
He said: “Anywhere in the world it is the sustainable financing of that sector that has brought down interest rates because once the funding is there, you create competition even among the financial institutions.
“So without being prompted, if you have option, you go to bank A and if it is charging you so and so rate is high, you can switch to another bank and this will bring down the pricing on the long run.”
Opanachi, also disclosed that so far the bank has zero non-performing loan(NPL), explaining that it has developed an in-house Credit Rating Model, which was validated by Dun & Brad Street.
“We have similarly put in place a number of risk management policies such as: framework for lending to finance companies and mortgage banks; related party credit policy; information security policy and business continuity policy,” he said.
Apart from the foregoing, the DBN MD said they just don’t give out money to PFIs but also know the MSMEs that are end borrowers and monitor their operations.
“We don’t just give the money to PFIs. What we do if PFIs bring their transactions, we know who the borrowers are, we have their details, who they are, what they do upfront. So by the time we give the money to PFIs and they on lend we go again to monitor,” he said.
He disclosed that the bank would be floating a subsidiary to guarantee the loans being given out. He added as a proof of the bank’s professionalism, the DBN has been recommended for various ISO certifications such as Information Security- ISO 27001; Business Continuity ISO 22301 and IT Service Management ISO 20000.