Minister of Finance Kemi Adeosun confirmed the approval on Tuesday in a letter addressed to the chief executive officer of the Development Bank dated March 28, 2017, and signed by the deputy governor of the CBN in charge of Financial System Stability.
The Central Bank of Nigeria has granted an operating license to the Development Bank of Nigeria Plc (DBN).
According to a press release sent to SaharaReporters, Minister of Finance Kemi Adeosun confirmed the approval on Tuesday in a letter addressed to the chief executive officer of the Development Bank dated March 28, 2017, and signed by the deputy governor of the CBN in charge of Financial System Stability.
The approval was subject to meeting the minimum capital requirement of N100 billion and the reconstitution of the board of the bank and reviewing its organogram.
Though the bank was conceived in 2014, its take-off had been fraught with delays, the director of information, Salisu Na’Inna Dambata, wrote in the letter.
The President Muhammadu Buhari administration inherited the project with a determination to resolve all outstanding issues and set a target of 2017 for its take-off.
The finance minister said earlier that the DBN would have access to US$1.3bn (N396.5 billion) which has been jointly provided by the World Bank (WB), KfW (German Development Bank), the African Development Bank (AfDB) and the Agence Française de Developpement (French Development Agency). The bank is also finalizing agreements with the European Investment Bank (EIB).
Mrs. Adeosun also stated that the bank would provide loans to all sectors of the economy, including manufacturing, services and other industries not currently served by existing development banks, thereby filling an important gap in the provision of finance to Micro, Small and Medium Enterprises (MSMEs).
As a wholesale bank, the DBN will lend wholesale to microfinance banks which will lend medium- to long-term loans to MSMEs. The MSMEs contribute about 48.47 percent to the Gross Domestic Product (GDP) of Nigeria but have access to only about 5 percent of lending from Deposit Money Banks (DMBs).
The federal government expects that the influx of additional capital from the DBN will lower borrowing rates and that the longer tenure of the loans will provide the required flexibility in the management of cash flows, giving businesses the opportunity to make capital improvements and acquire equipment or supplies.