President Goodluck Jonathan yesterday formally launched the Development Bank of Nigeria (DBN) to support medium to long term lending and loans with duration of up to 10 years and moratorium period of up to 18 months.
He stated at the launch that the initiative would enable Micro, Small and Medium Enterprises (MSMEs) enjoy some breather before repaying borrowings and also allow them to match loans terms with longer term investment cycles.
This is even as he used the occasion to present a document entitled, “Jonathan’s Next Four Years: My Vision for a Nigeria that Works for All,” a plan that will build on the platforms his administration has laid in the last four years to deliver growth, prosperity, peace and justice for all.
The Federal Executive Council (FEC) had recently approved a multi-donor credits from the International Bank for Reconstruction and Development Bank, German and French Development Agencies in the sum of $500 million, $450 million, $200 million and $130 million for the establishment of the DBN.
The World Bank version of the loan, which is $500 million has a 21-year maturity period with five years grace period and on 4.25 per cent interest rate. The ADF version attracts 1 per cent interest rate and 30 years maturity period.
The adequately capitalised DBN, which will lend to the specialised institutions, the Bank of Industry (BoI), the Bank of Agriculture (BoA) and the commercial banks for on lending to SMEs, will commence operations with a startup capital of $1.5 billion (about N300 billion), and is projected that the capital will increase to $5 billion (N1 trillion) in the medium term and ultimately to N2 trillion within 10 years.
In the first five years of operation, the DBN is expected to disburse over 200,000 new loans to MSMEs, and with each SME creating an average of five new jobs, it is expected that DBN will result in one million direct jobs being created, as well as several more indirect jobs.
In the same time period, DBN, alongside its partners, will also provide hands-on business training for over one million MSMEs, making them more bankable and thus more attractive for commercial bank lending.
It is projected that the contribution of MSMEs to Nigeria’s GDP will increase from the current 45 per cent, giving MSMEs increased access to finance, access to quality financial education and access to markets.
Jonathan described the occasion as a happy one, especially coming a day after he interacted with some Nigerian youths who are not seeking jobs but are interested in creating jobs, who have already expressed their gratitude to government for the Youth Enterprise Innovation in Nigeria (YouWin) programme that provides them grants to start up their businesses or expand their businesses.
He said he was passionate about DBN as it represents a milestone in his administration’s efforts to empower MSMEs, which he says forms the backbone of Nigeria’s economy, adding that the men and women who own and operate them are true reflections of Nigeria’s strong enterprise and what defines us as a nation and a people.
According to President Jonathan, “our recent re-basing of our economy exercise confirms the importance of MSMEs sector for our national economy. Currently, Nigeria has 17 million of these businesses, which contribute about 45 per cent of our GDP and employ about six per cent of our labour force.
“Today we celebrate these great men and women who keep our communities ticking with the impact of their hard work and practical ingenuity.
“Although MSMEs are critical to our development but for so long, we have not done enough to sufficiently support them in terms of their struggle to grow. Indeed, though the MSMEs sector provides 66 per cent employment to our population, access to finance has remained a major obstacle. This hinders growth and ability to generate the much needed jobs that we require as a nation.
“Despite government interventions, MSMEs have constantly been denied access to loans, facilities, limiting lending to just five per cent across the country.
“Only the BoA and BoI have strong focus on agriculture and the MSMEs sector but even these two have shortfall in addressing lending largely due to corporate governance challenges and over-dependence on capital injection from government to sustain their operations.
No comments:
Post a Comment