N300B Development Bank -Inuagurated By President Goodluck Ebele Jonathan Inaugurates

The President of the federal republic of Nigeria Goodluck Ebele Jonathan (GCFR) yesterday the 23rd of March 2015 inaugurated the Development Bank of Nigeria (DBN) at the Presidential Villa, Abuja.

The Development Bank Of Nigeria will commence full operations with a startup capital of $1.5 billion (about N300 billion), with the expectation of the capital to increase to $5 billion (N1 trillion) in the medium term and, ultimately, to N2 trillion in 10 years.

The essence of the Development Bank is to support the medium to long-term lending needs of Micro, Small and Medium Enterprises (MSMEs) with duration of approximately 10 years and moratorium period of about 18 months.

It will also allow Micro, Small and Medium Enterprises (MSMEs) a longing time before they start repaying and also allow them to match loan terms with longer term investment cycles.

Development Bank will lend to specific institutions of the Bank of Industry (BOI) and the Bank of Agriculture, (BOA) and the commercial banks for lending to small and medium enterprises (SMEs).

In the first five years of operation, the bank will be expected to disburse over 200,000 new loans to Micro, Small and Medium Enterprises (MSMEs) , and with each SME creating an average of five new jobs, it is expected that the DBN will result in one million direct jobs being created, as well as several more indirect jobs.

The President while giving his address said he was passionate about the DBN as it represents a milestone in his administration’s efforts to empower MSMEs, saying it forms the backbone of Nigeria’s economy.

He also said: “The recent rebasing of our economic exercise confirms the importance of MSMEs sector for our national economy. Currently Nigeria has 17 million of these businesses which contributes about 45 per cent of our GDP and employs about six per cent of our labour force.

The Finance Minister and the Coordinating Minister of the Economy, Dr. Ngozi, Okonjo Iweala, said the establishment of the bank was for a robust finance backing for small and medium enterprises.

She also said that the wholesale developmental institution plans to offer loans to at least 20,000 beneficiaries in the first one year of its operations and to start business in the next nine months.

The Minister of Industry, Trade and Investment, Olusegun Aganga, said the Bank of Industry gave out over N400 billion loans in the last four years to businesses in the country.

The Vice President of the African Development Bank, Solomon Asamoah, said the new bank would contribute to bridging funding gaps for Nigeria’s SMEs and also help to create jobs.

The Governor of the Central Bank Godwin Emefiele said that the Bank would join others in channelling needed funds to the SMES.