Development Bank of Nigeria Secures N23bn to Fund Small-scale Businesses

In the first phase of its N100 billion bond issue program aimed at assisting micro, small, and medium-sized enterprises (MSME), the Development Bank of Nigeria generated N23 billion.

The 2028 due date instrument has a 14.4% interest rate. The bank said that it would be useful in closing the MSME sector’s significant funding gap, which is essential for building inclusive growth and job creation.

The N20 billion bond issuance was oversubscribed by 15%, according to the executive of the wholesale lender, showing the bank’s attraction to the market. The majority of the capital for the bank’s initial local funding-raising effort comes from institutional international and local owners.

By December 2022, the ban has given more than N631 billion to more than 313,000 MSMEs via its partners. The sum represented a marginal increase over the N482 billion distributed in 2021. The bank’s latest fundraising efforts are intended to support its operations as it fully expands its capacity to provide financial assistance for the vital industry.

Tony Okpanachi, the bank’s managing director, highlighted that this was the institution’s first local rise since it started doing business. Okpanachi said during the signing ceremony in Lagos: So we have mobilized capital from outside the shore of Nigeria. That was the first step. As an institution going forward, we will also be able to catalyze some fundraising within the economy itself to lend to the MSMEs.

“We are expanding our funding base beyond the development partners we received funding from. Now we are raising funds locally because, if you remember, the need for that segment in the economy is huge.

Tony Okpanachi

“We have been doing that for the past six years, and our development partners provided the initial investment for DBN. We have therefore raised funding from sources outside of Nigeria. That was the initial action. In the future, as an organization, we will also be able to stimulate some economic fundraising for loans to MSMEs. Our first bond, issued today, is worth N100 billion, but the first series, which was oversubscribed by N3 billion, is only worth N20 billion. It will enable us to assist MSMEs through our wholesale approach and raise money locally, he said.

20,000 MSMEs to benefit from Development Bank of Nigeria’s fundraising

The executive director and chief financial officer of DBN, Ijeoma Ozulumba, disclosed that this fund was expected to help 20,000 small enterprises.

She added that the rates are reasonable and that when the economy grows and interest rates reduce, it would also have an impact on the instrument. She continued by saying that the fund would assist institutions in accessing financing.

She stated that future issuances would be subject to market conditions, the use of available money, and the approval of shareholders and advisers.

The Federal Government of Nigeria (FGN) and international development partners came up with the idea for the Development Bank of Nigeria (DBN) to address the key financing issues that Micro, Small, and Medium Scale Enterprises (MSMEs) in Nigeria face.

Through the provision of loans and partial credit guarantees to qualified financial intermediaries on a market-compliant and completely financially sustainable basis, it seeks to ease the financing challenges experienced by MSMEs and small Corporates in Nigeria.

The year 2022 will be a critical turning point for the Nigerian Micro, Small and Medium Scale Enterprises (MSME) ecosystem, according to the Development Bank of Nigeria (DBN), which announced this in June of this year.

Speaking to reporters in Lagos in June, Dr. Tony Okpanachi, Managing Director/CEO of Development Bank of Nigeria Plc, said the experience had been remarkable, full of wisdom and fortitude despite the many challenges that sought to impede the bank’s advancement in its nascent field of wholesale development finance.