DBN Lists Ecobank, 8 Others to Give $1.3b Loan to MSMEs

By Modupe Gbadeyanka

Nine financial institutions operating in the country have been shortlisted by the Development Bank of Nigeria (DBN) to disburse credit facilities to owners of businesses in the Micro, Small and Medium Enterprises (MSMEs) sector.

The nine banks comprise five commercial banks and four microfinance institutions.

Managing Director of DBN, Mr Tony Okpanachi, informed newsmen in Abuja that the loan application processes would be simplified to enable more entrepreneurs in the MSMEs have access to its intervention fund.

About 20,000 MSMEs across the country will benefit from the $1.3 billion long-term funding facility in the first year of full operation.

The commercial shortlisted to disburse the loan to beneficiaries in Ecobank, Diamond Bank, Wema Bank, Fidelity Bank and Sterling Bank, while the microfinance banks include Fortis, Microcredit, Busack and Infinity.

The DBN was established to confront financing difficulties of private sector investments in the country.

“Every development finance institution is more like a catalyst. You cannot meet all the demands. A typical business comes to a bank; they need working capital for instance, which is mostly short-tenured like 90 days, six months, etc., and most banks are willing to take those businesses.

“If a guy comes and says he needs to buy equipment for his factory and he needs four years to pay, the banks run away from that. And that is where development financial institutions come in. Another guy comes and said he needs seven years, usually most banks would run away and that’s where we step in. So it’s not either or, it’s collaboration. That’s the way it works.

“Some people say why do you guys want to go through banks again? But look at the total balance sheets of banks in Nigeria; which DFI can come near? Look at their branch networks across the country, and the customer history they have. Which DFI can meet that?

“So, the financial institutions can now give long-term financing to their customers with DBN funds and short-term with their own funds. The gap was long-term funding,” he said.

Mr Okpanachi said further that, “Part of what we are doing differently is that we are ready to help start-ups. This capacity building we are telling the financial institution that once a project comes and they assess it to be bankable, we are ready to take up the risk with them to give funding for start-ups.

“Subsequently, we are going to come up with products that we are going to sell through these financial institutions for such institutions that will again sell them down the line.

“For now we want the buy-in of the financial institutions themselves so that we tell them the fund is available for them and we are willing to fund start-ups.”