The Managing Director of Development Bank of Nigeria (DBN), Mr. Tony Okpanachi, has said that the development finance institution is set to disburse at least $1.3 billion as loans to Micro, Small and Medium Enterprises (MSMEs) in the country.
Okpanchi, who gave this hint during a media chat in Abuja, confirmed that the Partnering Financial Institutions (PFIs) his bank was working with had received more than 500 applications from MSMEs for funding support, adding that all requests which meet the conditions would be funded, by DBN working through the PFIs.
He explained: “Every development finance institution is more like a catalyst. You cannot meet all the demands. A typical business comes to a bank; they need working capital for instance, which is mostly short-tenured like 90 days, six months, etc., and most banks are willing to take those businesses.
“If a guy comes and says he needs to buy an equipment for his factory and he needs four years to pay, the banks run away from that. And that is where development financial institutions come in. Another guy comes and said he needs seven years, usually most banks would run away and that’s where we step in. So it’s not either or, it’s collaboration. That’s the way it works.
“Some people say why do you guys want to go through banks again? But look at the total balance sheets of banks in Nigeria; which DFI can come near? Look at their branch networks across the country, and the customer history they have. Which DFI can meet that? So the financial institutions can now give long-term financing to their customers with DBN funds and short-term with their own funds. The gap was long-term funding”, the DBN boss added.
On the bank’s assistance to start-up entities, Okpanachi explained that part of what the bank was doing differently is that “we are telling the financial institution that once a project comes and they assess it to be bankable, we are ready to take up the risk with them to give funding for startups.
“Subsequently, we are going to come up with products that we are going to sell through these financial institutions for such institutions that will again sell them down the line. For now we want the buy-in of the financial institutions themselves so that we tell them the fund is available for them and we are willing to fund startups”, he added.