The Development Bank of Nigeria (DBN) was set up by the federal government of Nigeria in conjunction with some global development patners to address the issues and challenges of financing mostly facing Micro, Small and Medium Scale Enterprises (MSMEs). These MSMEs are the largest employers of labour in low income countries in which Nigeria belongs and their viability is endangered by lack of access to savings, insurance and credit facilities.
The main objective of DBN is therefore to alleviate financing constraints faced by MSMEs through the provision of financing and partial credit guarantees to eligible financial intermediaries called Participating Financial Institutions (PFI) on a markets conforming and fully financially sustainable basis.
MSMEs in Nigeria play a vital role in economic growth, poverty alleviation, employment creation, economic empowerment and shared wealth creation and DBN is determined to play a focal and catalytic role in providing funding and risk-sharing facilities. DBN will also create incentives for financial institutions to provide funding facilities designed to meet the needs of these MSMEs.
Eligibility Criteria To Receive DBN Financing
- Participating Financial Institutions (PFI) shall hold a valid and issued license from the CBN to operate as a bank or finance company.
- PFI shall ensure that its shareholders and board of directors are qualified persons of integrity and knowledgeable in business and financial matters according to the applicable regulatory guidelines.
- The PFI shall demonstrate within the three most recent financial years, two years of profitable lending operations with very effective risk management procedures and controls.
- PFI shall show evidence of compliance with all applicable laws and regulations from the CBN
- PFI shall have qualified and experienced management, adequate organization and institutional capacity for its specific risk profile
- PFI shall have well defined policies and written procedures for management of all types of financial risks such as interest rate and market risks as well as risks associated with balance sheet.
- PFI shall maintain adequate capital prescribed by CBN’s prudential regulations
- PFI shall maintain adequate liquidity in line with the required levels prescribed by CBN.
- PFI shall have adequate management system for information as well as a strong commitment to serving the MSME sector.
- PFI shall comply with all present and future laws and regulations concerning consumer protection as well as the ability to review each customer’s ability to repay before entering the loan agreement.
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Products And Services
- Wholesale Lending: DBN provides wholesale term loans and risk- sharing facilities to PFI for on-lending to MSMEs.
- Partial Credit Risk Guarantees: PFI can choose to share risks with DBN
- Capacity Building: Technical assistance will be provided to both PFI and MSMEs.
How To Get A DBN Loan
- Visit your bank (commercial or micro-finance bank) or development finance institution and indicate that you want to apply for a DBN loan.
- The bank will appraise the business and loan purpose, review your account statements and revenue and if the assessment is deemed favorable will apply for DBN for funding.
- If the loan is approved by DBN, DBN will disburse the loan or risk-sharing facilities to the PFI for on-lending to MSMEs.
Participating Financial Institutions
- Fidelity Bank Plc
- Wema Bank Plc
- LAPO Microfinance Bank Ltd
- NPF Microfinance Bank Nigeria Ltd
- Microcred Microfinance Bank Ltd
- AB Microfinance Bank Nigeria Ltd
- Infinity Microfinance Bank Ltd
DBN supports medium to long term lending to MSMEs with a repayment period of up to 10years and a moratorium period of up to 18 months. This will give the MSMEs enough time to repay all loans which will be paid directly to the PFI who will in turn pay to DBN.