Development Bank of Nigeria raises N23bn to support small-scale businesses

The Development Bank of Nigeria has generated N23 billion in the first part of its N100 billion bond issuance programme targeted at supporting micro, small, and medium-scale enterprises (MSME). The instrument that will be due in 2028 is at 14.4 percent. The bank said it would come in handy in reducing the large funding gulf in the MSME sector, which is pivotal for establishing inclusive growth and job creation.

According to the executive of the wholesale lender, the N20 billion bond issuance was oversubscribed by 15 percent, a clear demonstration of the bank’s market appeal. It is the first local funding-raising attempt by the bank and is majorly funded by institutional foreign and local shareholders.

The ban had disbursed over N631 billion to more than 313,000 MSMEs through its partners as of December 2022. The value was a slight increase from N482 billion disbursed in 2021. The new fundraising by the bank is aimed at fueling the performance as it would be deployed in a full expansion of its capacity to offer financial aides for the critical sector.

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Managing Director of the bank, Tony Okpanachi, noted that the issuance was the bank’s first local raise since it began operation. Speaking at the signing ceremony in Lagos, Okpanachi said: “So we have mobilized capital from outside the shore of Nigeria. That was the first step. As an institution going forward, we will also be able to catalyze some fundraising within the economy itself to lend to the MSMEs.

“We are expanding our funding base beyond the development partners we received funding from. Now we are raising funds locally because, if you remember, the need for that segment in the economy is huge.

Tony Okpanachi

“In the last six years, we have been doing that, and the initial funding we have raised for DBN has come from our development partners. So we have mobilized capital funds from outside the shore of Nigeria. That was the first step. As an institution, going forward, we will also be able to catalyze some fundraising within the economy itself to lend to the MSMEs. What we have done today with this our debut bond is N100 billion, but the first series is N20 billion (oversubscribed by N3 billion). It will enable us to raise money locally and provide funding for MSMEs through our wholesale model,” he said.

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20,000 MSMEs to benefit from Development Bank of Nigeria’s fundraising

Ijeoma Ozulumba, DBN’s Executive Director and Chief Financial Officer, revealed that about 20,000 small businesses were likely to benefit from this fund.

She further stated that the fund would help institutions access finance, adding that the rates are affordable and that as the economy improves and interest rates moderated, it would also reflect on the instrument.

According to her, further issuances would depend on the market conditions, the utilization of available funds, and when shareholders and advisers gave the go-ahead.

The Development Bank of Nigeria (DBN) was conceived by the Federal Government of Nigeria (FGN) in collaboration with global development partners to address the major financing challenges facing Micro, Small, and Medium Scale Enterprises (MSMEs) in Nigeria.

Its objective is to alleviate financing constraints faced by MSMEs and small Corporates in Nigeria by providing financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.

The Development Bank of Nigeria (DBN) disclosed in June this year that the year 2022 marked a significant milestone as it celebrated five years of creating impact within the Nigerian Micro, Small and Medium Scale Enterprises (MSME) ecosystem.

Addressing newsmen in Lagos in June, Dr Tony Okpanachi, Managing Director/CEO Development Bank of Nigeria Plc, stated it had been a remarkable experience filled with much learning and resilience, amidst the diverse headwinds that  sought to inhibit the bank’s progress in its nascent space of wholesale development finance.