CBN finally approves licence for Development Bank of Nigeria

At last Nigeria’s quest to have a Development Bank of Nigeria (DBN) join the conventional commercial banks has become real.

The Central Bank of Nigeria (CBN) has approved the operational licence for the Ministry of Finance on Wednesday to go ahead with the opening of the special bank.

There have been a lot of debates over the need for such a bank in a country where the 22 commercial banks, plus the Federal Mortgage Bank are struggling for a space, but without enough financial muscles to support the private sector.

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But ministerial officials said the aim of having DBN is primarily to support small-scale businesses with loans of varying lengths at lower interest rates than currently available, as the country contends with its first recession in 25 years.

The finance ministry said approval for the licence was subject to meeting the minimum capital requirement of about $326 million, the reconstitution of the bank’s board and a review of the organisation’s structure.

Reports have it that the development bank already has about $1.3 billion as seed money provided by the World Bank, African Development Bank and German state bank Kfw, the finance ministry said on its Twitter feed.

‘The government expects that the influx of additional capital from the DBN will lower borrowing rates and the longer tenure of the loans, will provide the required flexibility in the management of cash flows”, a foreign news agency quoted the Finance Minister, Mrs. Kemi Adeosun, as saying in a statement.

The minister had earlier confirmed that 50 percent of the GDP in Africa’s largest economy is made up of small companies.

 

 

 

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