The Development Bank of Nigeria (DBN) has announced plans to build capacity of the Micro Small and Medium Enterprises (MSMEs) to enable them access its cheap loans through the Participating Financial Institutions (PFIs).
This is part of the bank’s new strategy to boost the growing network of MSMEs which the wholesale bank is financing across the country and also extend its reach to underserved areas.
Already, DBN has in the current year disbursed over 100 Billion Naira to over 95,000 MSMEs cutting across various sectors of the economy. Seventy percent of the loans went to women-owned/managed businesses while 51% so far were disbursed to youth owned businesses.
Tony Okpanachi, DBN’s Chief Executive Officer says the bank’s new strategy has become important because “a major challenge faced by the MSMEs is their inability to structure and put together a bankable business plan which makes banks view them as high risk and therefore unwilling to finance them”.
To fix the problem and make MSMEs attractive to DBN’s participating financial institutions (PFIs), Okpanachi said that the bank’s “Chief Operating Officer will work with relevant departments within DBN to put together an immediate capacity-building plan that will involve assembling a number of MSMEs in Borno State and making them go through an extensive capacity building programme”.
As part of this renewed focus, DBN is taking several measures including the expansion of its capacity building programmes in the North East, South East and North West which have witnessed comparatively lower rates of disbursement.
The objective is to boost the capacity of local entrepreneurs to meet its requirements and qualify for inclusion for DBN support.
At the bank’s first DBN MSME Summit held in Maiduguri, Borno State, Okpanachi said this in line with the bank’s mandate to support the stimulation of diversified and inclusive growth and alleviate specific financing constraints that hamper the growth of domestic production and commerce by providing targeted wholesale funding to fill identified enterprise financing gaps in the MSME segment.
DBN commenced lending operations in November of 2017 with two microfinance banks namely, LAPO and NPF with a pilot loan amount of N200 million to about 300 MSMEs.
In its first full year of operation in 2018, the bank increased disbursements to about N30 Billion and reached 35,000 MSME’s in the country.