Ngozi Okonjo-Iweala, Co-ordinating Minister for the Economy and minister for finance, confirmed to BusinessDay that the Federal government is approaching $2 billion as take off capital for the proposed Development Bank of Nigeria (DBN) .

The DBN, a Wholesale Development Finance Institution is to build banks’ capacity on Small and Medium Enterprise Financing, which falls short in today’s system.

Billed to take off in a couple of months, the institution will provide wholesale, long term financing to the primary DFIs, banks and other primarily lending institutions, for on lending to the SMEs.

Giving an update on the project, the finance minister said the Federal Government is expected to bring in between $450 and $500 million.

The World Bank and African Development bank have already made pledges of $500 million each, as well as KfW- the German government-owned development bank and the French Development Agency ( AfD) which have also made separate funding commitments.

Okonjo Iweala, said the bank would be private sector-run eventually and would provide up to 15 year money to Nigerian businesses to tackle the age-long poor access to long term funding to the nation’s industrial sector.

She said two key sectors- manufacturing and agriculture would be targeted – the idea is to particularly promote these two sectors that have high potential for jobs and economic growth.

The model however envisages that large firms would get about 20 percent of the total loan portfolio, BusinessDay also gathered.

The incorporation process for the bank is almost completed, with an Approval In Principle already granted by the regulator- the Central Bank of Nigeria (CBN), which has already developed the regulatory principle to supervise this institution.

Marie Francoise Marie-Nelly, World Bank Country Director for Nigeria told BusinessDay that out of the $500 million credit that the World Bank would provide, about $10 million is dedicated to providing technical assistance to precisely support the primary banks in SME financing.

“Out of $500 million, $445 million is a line of credit, but there is a $10 million in the envelope that is dedicated to technical assistance to precisely support the primary banks because the other issue that we observed is that in addition to the issue of tenure, a number of banks are not equipped to provide financing.

“They do not know how how to analyse the market needs, the business. So there will be technical assistance to the primary banks, to support that.

“There will partnership agreement between the WDFI and the primary banks that benefit,” Marie-Nelly noted.

“They will have resources in the form of technical assistance to allow them to hire experts that will help them develop capacity.

“A number of banks do not yet have an SME department, so it will help them developed an SME department that can go to this niche and know what to look for,” she added.

She stressed that although the World Bank would make the $500 million available to the institution, this disbursement would be based on the performance of the institution.

“What we intend to do on terms of releasing the credit line will be based on the progress they will have made. There is a schedule that is established to make sure that the funds align with the development objectives,” Marie-Nelly assured.

Ousmane Dore, AfDB Country Director in Nigeria, had confirmed to BusinessDay in an exclusive interview that his bank was committing some $500 million into the project, coming in a combination of equity and debt.

Dore said the equity contribution would stir confidence in the project and possibly spur other equity investments from other sources. The remaining debt component would be coming mainly from the African Development Bank window at rates below 3 percent.

He disclosed that AfDB has advanced talks with the Nigerian government on the project, and would be presenting the assessment report to the Board for final approval.


http://businessdayonline.com/2014/11/new-national-development-bank-to-kick-off-with-2bn-capital/#.VHLynDTF8wJ

Nice one, PDP all the way

am really shocked that it is same okonji iwala i know......cluelessness is indeed contagious

mrvitalis:
am really shocked that it is same okonji iwala i know......cluelessness is indeed contagious

How do you mean?