April 1, 2017

DBN: There will be no political interference — Adeosun

DBN: There will be no political interference — Adeosun

Finance Minister, Mrs Kemi ADEOSUN

…As Okpanachi assures on long-term, low interests funds

By Emma Ujah, Abuja Bureau Chief

There will be no political interference in the running of the newly established Development Bank of Nigeria (DBN), the Minister of Finance, Mrs. Kemi Adeosun, pledged, yesterday.

She spoke while presenting the Managing Director (MD) of the bank, Mr. Tony Okpanachi and the top management team of the bank, at a press briefing, in Abuja.

She said that the federal government has only one member on the board of the bank and that Mr. Okpanachi’s management would be insulated from government control.

The minister said, “I want to say something about what makes DBN different.  This is your last time of seeing me with DBN.  It is going to be devoid of political interference.

Finance Minister, Mrs Kemi ADEOSUN

“Government has only one member of board, which is the chairman, out of about 9. So it is not going to be government-controlled.  It is not going to be influenced by politics. It is going to be run by private sector best practice

“We have learnt lessons from the past.  What ruined the ones in the past was political interference- lend to my local government; lend to my friend; lend to my family.  So there is nothing like that.

“Secondly, their model is a wholesale model.  There won’t be ‘the Minister said lend to this person,’ because they are lending to institutions; they are lending to banks; they lending to cooperatives and so on.

“The multilaterals have done it elsewhere and they are bringing the model here.  With the multilaterals and private sector players on the board, we have a board that we (government) can’t control.”

Mr. Okpanachi said that DBN with a $1.3 billion would run on a model that is totally different from other Development Finance Institutions (DFIs) in the sense that it would target low pricing of funds and provide long –tenured loans.

“Pricing and tenor of funding is very key to our mandate and we will be targeting how to ensure that we make the rightful impact.  We will be making it possible for long-tenured funds of as long as 10 years with a moratorium period.  So at the end, we would be looking at as long as 12 years.   He added that DBN would de-risk it finances by providing as much as 50 per cent guarantee on loans given out by the participating finance institutions.

“We will moderate the risks.  Part of the problem of lending to the SMSEs is the risk factor.  But we are going to try to de-risk that area as we are going to come out with a guarantee scheme where we are going to guarantee up to 50 per cent of whatever is being taken by such participating finance intuitions. That will encourage them to lend to the SMEs.

The DBN is quite positioned to make the needed difference in funding of the MSMEs sector in the country.

Mr. Okpanachi revealed that with the wholesale model of the DBN, it would require a lean staff strength of about 35 as it would depend on the structures of the participating finance institutions, for much of its operations. The bank he said will not lend to MSMEs by insisting on collaterals but that it would use the applicants cash flow records as part of the requirements for loans.