The African Development Bank has announced that it was investing about $500m in the Development Bank of Nigeria.
According to the AfDB, while $50m is invested in equities, about $450m is set aside for loans that will be disbursed to micro, small and medium enterprises through microfinance institutions and Deposit Money Banks.
The Vice-President, AfDB, Pierre Guislain, disclosed this at the headquarters of the DBN in Abuja while speaking with journalists after concluding a meeting with officials of the lender on Wednesday.
Explaining how the AfDB had been of support to the DBN, Guislain said, “We invested in equities, which is about $50m, as well as in loans, which also is about $450m. This is a really big financial commitment and so we have made the first disbursement, which happened last month and is on the loan part. It is also important to state that we will be continuing as planned.”
He further stated that the AfDB was a major shareholder in the DBN and was part of the founders of the institution, as it fully participated in its creation.
Guislain stated that the AfDB had a major aim of supporting the MSMEs in Africa, adding that in order to achieve this, it had to work with national partners.
He said, “We are one of the major shareholders of the bank (the DBN) and one of the major lenders to the bank. One of the main goals of the AfDB is to support micro, small and medium enterprises across the continent of Africa.
“And providing a support at that level requires working with national partners who then in turn work with their own local financial institutions.”
In his address, the Chairman, DBN, Dr. Shehu Yahaya, noted that the Federal Government, in close partnership with international development finance institutions such as the AfDB, established the DBN to provide sustainable financing through eligible participating financial institutions for on-lending to the MSMEs in order to develop that segment of the Nigerian economy.
He stated that on October 30, 2017, the DBN disbursed a total of N5bn to microfinance institutions for on-lending to over 20,000 MSMEs across the country.
Yahaya said, “We have commenced the engagement of commercial banks. Eligibility questionnaires have been sent to all commercial banks, out of which 12 have responded and expressed interest in assessing the DBN loan. The on-boarding process for banks that met our eligibility criteria has commenced.
“Two commercial banks have already signed our master lending agreement and due diligence on these banks will commence shortly, while we work towards signing on two more commercial banks this month. Overall, a total of 36 PFls were engaged, of which 32 responded and were duly assessed, with only 21 meeting the DBN eligibility criteria.”