Business
THE European Investment Bank (EIB) and the African Development Bank (AfDB) have agreed to support the newly established Development Bank of Nigeria (DBN), to strengthen lending for business and agriculture investment in the country.
Both organisations said this in a joint statement issued on Thursday in Abuja, which said EIB had finalised a 20 million dollar equity stake in DBN, alongside 50 million dollar equity participation from the AfDB.
The News Agency of Nigeria (NAN) reports that DBN was recently created by the Federal Government to address financing challenges hindering private sector investment in the country.
The bank is to play an important and catalytic role in providing funding and risk sharing facilities to micro, small and medium enterprises and small businesses.
Mr Tony Okpanachi, Managing Director, DBN, said the bank would overcome the funding gap in the micro, small and medium scale enterprises space and help businesses unlock opportunities across Nigeria.
“DBN’s ambition is strengthened by the financial and technical support of international partners, including EIB and AfDB.
“DBN builds on international experience and uses a business model that has demonstrated proven success to enhance private sector investment across Africa and around the world where other financing options are inadequate or absent,” said Okpanachi.
Mr Stefan Nalletamby, Director, Financial Sector Development Department, AfDB, said private sector businesses were critical to the development of the Nigerian economy as they possessed huge potential for employment generation and output diversification.
“Nevertheless, there has been under-performance of these businesses and this has undermined their contribution to economic growth.
“Among the issues affecting their performance is the shortage of finance, particularly investment finance, which occupies a very central position,” said Nalletamby.
He, however, said DBN was expected to contribute to mobilising significant long-term financing to an important yet underserved sector with high development potential.
According to Mr Ambroise Fayolle, Vice-President, AfDB, new private sector investment is crucial to create jobs and enable business to expand, adding that limited access to long-term financing holds back economic growth.
He also said EIB was pleased to support DBN to strengthen private-sector investment in Africa’s largest economy.
“We look forward to continued close cooperation with Nigerian and international partners to ensure that once fully operational the new DBN can help harness the country’s economic potential,” he said.
Ambassador Ketil Karlsen, Head, European Union (EU) Delegation to Nigeria and ECOWAS, also said the EU was committed to supporting private-sector investment in Nigeria.
He said the new backing for DBN by both the EIB, and AfDB, with 13 EU member state shareholders, would make a clear contribution to tackling the lack of access to credit by entrepreneurs and businesses across the country.
“With more investment, we hope to promote a vibrant economy and stimulate growth, employment and increase opportunities, especially for youth,” he said.
According to the statement, presently, new investment essential for companies to expand and create jobs is hindered by limited access to commercial banks.
It said it was estimated by DBN that only five per cent of the 37 million entrepreneurs and small businesses in Nigeria that contribute to 50 per cent of Gross Domestic Product (GDP) can access credit in the financial system.
The statement also said other international financial institutions including the World Bank, Germany’s KfW and the French Agence française de développement (AFD) would also support the new bank alongside backing from the Federal Government. (NAN)
– Apr. 19, 2018 @ 18:59 GMT
AE
Tags: AfDB to support private sector investment through Development Bank of Nigeria EIB
