By Franklin Alli

THE Federal Government has unfolded new take –off- date and capital base for Development Bank of Nigeria, DBN.

Minister of Finance, Mrs. Kemi Adeosun who stated this during ‘The Wealth Creation Platform’ in Lagos, said that the proposed bank will begin full operation by January 2017 with $1.3 billion(about N400 billion) capital base.

“We are putting money into the Development Bank of Nigeria; that is a specialist bank that is focused on channelling low cost funds to existing and start up Small and Medium Enterprises (SMEs). It is a project that was supposed to start two years ago but has been stalling.

Funding supports

“We’ve got it going and we’re hoping it will take off in early 2017. That bank has $1.3 billion in capital that will be pumped into SMEs through micro finance banks and a few commercial banks at low cost because we know that once the SMEs grow you’ll start to see a lot more activities,” she stated.

It was earlier reported that the bank was billed to commence operation in July this year with $323 million (about N64 billion) funding supports from development finance banks in Africa.“A breakdown of the support shows that African Development Bank, AfDB, is supporting the DBN operation with $258.5 million, African Development Fund, ADF, $32, 590,000 and Delta $32,036,874, totaling $323.2 million or over N64 billion.

DBN is a financial institution that is expected to bridge the gap between the Bank of Industry and other commercial banks that could not satisfy the funding needs of Micro, Small and Medium Enterprises, MSMEs in the country.

The principal mission of the bank is to increase financial inclusion by providing access to credit finance.

Also, the DBN will support medium to long-term lending to the MSMEs, with duration of up to 10 years and a moratorium of up to 18 months. This would enable borrowers in the sectors have a lengthy period to repay the loans from DBN unlike the Deposits Money Banks, DMBs.

Vanguard learned that the journey to set up the bank started in 2013 when the federal government set up a working group under the National Council on Privatization (NCP). The working group came up with the recommendation, in addition to several other recommendations, that Nigeria needs a strong Development Finance Institution that will further open up access to finance for our micro, small and medium enterprises. All over the world, development banks are set up to provide long-term finance (debt or equity) which commercial banks and the capital market cannot, or will not provide.

Aside the development of small businesses and the encouragement of entrepreneurial activity, the broader aim of Development banks include the redistribution of income between social classes, diversification of industry, and of course, job creation. Also, the Ministry of Finance stated that 20,000 beneficiaries would be given loans during the bank’s first year of operation.