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CBN seeks more funds, autonomy for DFIs

The Central Bank of Nigeria (CBN) on Wednesday advocated that Development Finance Institutions (DFIs) in Nigeria be granted operational autonomy and repositioned to perform the role envisioned for them.

Mallam Lamido Sanusi, CBN Governor made the call in Abuja in a keynote address presented at the 3rd Public-Private Partnership (PPP) forum for private and public sectors stakeholders. The governor also urged that the funds recovered from petroleum subsidy removal be diverted to strengthen government-owned banks to enable them partake in infrastructure financing.

The forum, which was organised by the Infrastructure Concession Regulatory Commission (ICRC) has the theme: Development Finance Institutions and Long-term capital for Infrastructural Transformation and National Economic Development.

Sanusi in his paper entitled: What Nigeria can learn from Brazilian Development Bank (BNDES) and Indian Infrastructure finance company, said that Nigeria should consider sustainable ways of supporting DFIs that could support the financing infrastructure.

He noted that Brazil and India had demonstrated that an approach based on establishing an infrastructure bank could help unleash the required finance.

While giving an insight into what Nigeria should consider as a sustainable way of supporting DFIs, Sanusi said: “Nigeria could pursue such a model, whereby a new government-owned bank could raise tax-free bonds to fund projects.

“Alternatively, the mandate of an existing government-owned bank such as Bank of Industry could be expanded to enable it to partake in infrastructure financing. The bank could be financed from funds recovered from petroleum subsidy removal, and equipped with professional and qualified management recruited globally.”

The governor said that the DFIs in Nigeria faced some challenges which include poor corporate governance, low capitalisation, inadequate skilled manpower and poor business models.

“DFI in developing countries exist traditionally to address market failures and to complement government resources and market financing. The dual roles of these institutions involve financing development projects and acting as facilitator of finance in the broader industrialisation and economic development strategies of countries.”


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