January 25, 2019

Credit guaranty scheme underway for DBN institutions


By Emeka Anaeto, Business Editor

IN a bid to expand the scope of access to credit especially on its platform, the Development Bank of Nigeria, DBN, would be setting up a subsidiary to undertake credit guarantees for participating financial institutions, PFIs.

Meanwhile the bank, in its first year of operations, exceeded its projected performance with a total loan disbursement of N31.36 billion to 35,000 Micro, Small and Medium Enterprises (MSMEs) in Nigeria.

Disclosing these at a media parley yesterday in Lagos, the Managing Director of DBN, Mr Tony Okpanachi, said the aim of the credit guarantee scheme is also to de-risk the MSME sector while establishing a risk sharing arrangement with PFIs up to 50%.

The scheme, according to him, would eventually create a critical mass of MSME lending in the economy.

Hitherto, groups in the Nigerian MSME space have alleged that most of the intervention funds raised by some government institutions amount to hundreds of billions of Naira are not disbursed and Vanguard investigations reveal that the institutions involved, including commercial banks, hold back the funds claiming that the MSMEs are too risky to take the credit facilities.

But Okpanachi said that DBN’s model has been able to successfully disburse its funds to the small businesses while recording zero non-performing loans, NPL, so far.

He added, however, that in the current financial year, DBN would be focusing on capacity building, up-scaling the capacity of PFIs to lend to MSMEs, while also building the capacity of MSMEs to access and use the DBN finance efficiently.

He also said that after it commenced lending activities in October 2017 with just two PFIs, DBN had established a strong on-boarding drive with a total of 29 financial institutions at various stages of engagement as PFIs within one year.

As part of its robust engagement with and development of the entrepreneurial community, he said that DBN has entered partnerships with key organizations including Small and Medium Enterprises Development Agency of Nigeria, SMEDAN, for capacity building alongside some private sector players such as Agra Innovate amongst others to train MSMEs in the upcoming year.

In addition he said the bank has participated in National Association of Small & Medium Enterprises (NASME) MSME Clinics across the country.

Spurred by the achievements attained in its first year of operations, Okpanachi hinted that the bank’s disbursement target for the year 2019 has increased to N70 billion and is expected to help deepen the bank’s penetration in the MSMEs sector of the economy.

As a proof of the bank’s professionalism, the DBN boss also noted the bank has been recommended for various ISO certifications such as Information Security- ISO 27001; Business Continuity ISO 22301 and IT Service Management ISO 20000.

The Development Bank of Nigeria (DBN) was set up as a wholesale development finance institution (DFI) to provide sustainable financing through eligible Participating Financial Institutions (PFIs), who would in turn, lend to end-borrowers – Micro, Small and Medium Enterprises (MSMEs) for the development of that segment.