(Ecofin Agency) - The Federal Ministry of Finance has said that the $1.3 billion Development Bank of Nigeria (DBN) will soon be launched, as the selection process of the executive management team of the financial institution has been completed. The Ministry in a statement said an operating licence from the Central Bank of Nigeria (CBN) has also been applied for and is expected very soon.

DBN is mutually funded by the World Bank, the German Development Bank (KfW), the African Development Bank (AfDB) and the Agence Française de Development (French Development Agency). The bank is also concluding arrangements with the European Investment Bank (EIB) for more investment.

This bank’s major obligation is to encourage growth by financing projects, particularly in the small and medium scale industries through eligible financial intermediaries. According to the Director of Press in the Federal Ministry of Finance, Salisu Dambatta, DBN as a wholesale bank would lend wholesale to microfinance banks, which would provide medium to long-term loans to Micro, Small and Medium Enterprises (MSMEs).

“The DBN will provide loans to all sectors of the economy including, manufacturing, services and other industries not currently served by existing development banks thereby filling an important gap in the provision of finance to MSMEs. The MSMEs contribute about 48.47 percent to the Gross Domestic Products (GDP) of Nigeria but have access to only about 5 percent of lending from Deposit Money Banks (DMBs),” he told the Guardian.

Dambatta added that DBN’s operations would not in any way bring about the removal of other sectorial development financing institutions such as the Bank of Industry (BOI), Bank of Agriculture (BoA) or any other development banks.

Anita Fatunji