DBN must be people-friendly

Abdullahi M. Gulloma

The Federal Executive Council (FEC) has approved a $1.3bn loan for the take-off of the Development Bank of Nigeria (DBN), the Minister of Finance, Mrs Kemi Adeosun, said yesterday.
Addressing State House correspondents at the end of the weekly FEC meeting in Abuja, Adeosun said that the loan has repayment period of 20 to 21 years.

The minister said that with acquisition of the $1.3bn loan, the DBN would be able to lend to Small and Medium Enterprises (SMEs) for a longer period because of their capacity to employ more people, compared with so-called big corporations.
“Council gave the approval for credit facilities totaling $1.3bn to support the Development Bank of Nigeria,” she said. “As you know, the Development Bank of Nigeria recently received its license and is been funded by some long term loans from some of our development partners.

“So, the World Bank had given us $500m repayable over 21 years and all of this is at a concessional rate. The African Development Bank is giving us $450m and KfW Development Bank is giving us $200 million and the French Development Agency is giving us $130m,” she said.
She said the legal opinion of the attorney-general of the federation and approval of the National Assembly were the two main requirements needed to access the money. “Before it goes to the National Assembly, it needs to be approved by FEC. And the FEC simply approved today that these loan requests should go to the National Assembly for approval so we can access this money and the Development Bank of Nigeria can take off fully as it is expected to transform financing to our MSME sector.”

No doubt, this bank came at the opportune time to develop the MSME sector which, as the minister said, has great potential to develop the economy and provide employment to teeming number of unemployed youth.
But to realise its objectives, a development bank, considered as a project worthy of financing albeit through external loan, must not only be viable, it must also contribute to national development. Thus, it must apply national development criteria on behalf of government for it to be successful.

The need for inclusive financial markets and long-term financing should also be high on the development bank’s agenda. Overall, it can be said that the economic sustainability of any bank relies on its ability to provide essential services on an affordable basis for clients.
In a situation where the bank operates, like others in the country do, and make its services unattractive and beyond the reach of the common people, then, it will not only lose its focus, but it could negate the reasons for which it was established.

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