Newly created Development Bank of Nigeria (DBN) has vowed not to make the mistakes of past Development Finance Institutions in Nigeria.
In a departure from past practices, DBN says it will not just commit its facility to businesses but will, carry out capacity building in area of businesses.
Managing Director/ Chief Executive Officer of DBN Mr. Tony Okpanachi offered the perspective as a member of panel that examined business access to capital at the ongoing Nigeria Economic Summit (#NES23) in Abuja Wednesday.
To achieve these, he disclosed that DBN will provide long term credit to MSMEs through financial banks/intermediaries, build capacity of entrepreneurs as well as share partial credit guarantee in the bid to ensure sustainable flow of credit to the MSMEs segment of the market.
He said: “if you want to run a sustainable business, you can’t run away from the micro environment that you have. And DBN is set to run a sustainable business. We are trying to avoid the mistakes of the past, where you come out with intervention funds that dry up, but there’s no sustainability. One of the key things DBN is doing differently is to run a sustainable business over time.”
Okpanachi lamented that access to capital remains major constraint facing businesses especially MSMEs, noting that the bank was set up to address financing businesses.
According him, “DBN has three broad mandates -to lend to the MSMEs through financial institutions, build capacity for financial institutions that interface with MSMEs and undertake partial credit financing.”
He stated that DBN facilities to MSMEs “will be long term in nature to enable SMEs break even and survive.”
Okpanachi expressed optimism that the passage of the Movable Assets Act, will boost access to long term funding for MSMEs.
According to him, “If you are talking of collateral, where you can use movable assets to secure some of your lending, this was not there before. That Act has been passed into law. So the operationalization of that Act allows most of all these small businesses that have little movable assets, to use such assets as collateral when it becomes necessary.”
Statistics he said have shown that “most MSMEs die in their formative stage due to short tenure funding at their disposal adding DBN is purposely established to address the gap in MSMEs funding.”
Other financial experts and entrepreneurs emphasized the need for the Federal Government to provide credit guarantees that will facilitate access to credit for over 37 million Medium, Small and Micro Enterprises (MSMEs) across the country.
Speaking, Group Managing Director of Eco Bank PLC, Mr. Ade Adeyemi said there was need to de-risk the sector to make it attractive to financial institutions.
As a way out, he advised MSMEs to come together under a cooperative associations. Ade Ayeyemi, emphasized the need to deepen the capital market, which he argued “is very small (less than 10%) of our GDP.
He also stressed the need for MSMEs to have business ideas with profit equation while government should bring down the 17 percent inflation rate to bearest minimum for the commercial banks to intervene, compared with other neighbouring countries with lower inflation rates.
According to him, there is dire need to immediately address the process of foreclosure, constitute MSMEs to cooperatives/clusters to enable them access to capital and improve local savings.
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