The Development Bank of Nigeria (DBN) was conceived by the Federal Government of Nigeria (FGN) in collaboration with the World Bank (WB), African Development Bank (AfDB), KfW Development Bank, French Agency for Development (AFD) and European Investment Bank (EIB) to address the major financing challenges facing Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria. The objective of the Bank is to stimulate more diversified and inclusive growth and contribute to alleviate financing constraints faced by the MSMEs and small corporates in Nigeria through providing financing, partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis
A major argument for the establishment of DBN is so that it can fill the gap left by private financial institutions and other already existing DFIs. This resulted in the need for the Federal Government to establish DBN, which will be better regulated and more clearly aligned with development priorities. To ensure sustainable impact and scale, DBN is designed to operate a sustainable market-based business model, respond to emerging market developments, effectively address market gaps, to complement and leverage private sector funding and ensure that pricing fully reflects costs and credit risk.
DBN will play a focal and catalytic role in providing funding and risk-sharing facilities. It will also incentivise financial institutions, predominantly deposit-money and microfinance banks, by augmenting their capacity and by providing them with funding facilities designed to meet the needs of these smaller clients. MSMEs in Nigeria have enormous potentials to play a crucial role in economic growth, poverty reduction, employment creation, and shared wealth creation. They are a growth-supporting sector that not only contribute significantly to improve living standards, but also bring substantial local capital formation and achieve high level of productivity of MSMEs.
Among other DFI’s, DBN will play multiple roles in financing, promoting and supporting MSMEs with a keen interest in accelerating the pace of growth of productivity and per capita GDP. It is an obvious requirement for alleviating poverty and reducing Nigeria’s developmental gap.
Dunn Loren Merrifield (DLM) Advisory Partners was engaged as the sole financial adviser to provide financial advisory services for the establishment and set up of DBN. DLM was mandated to obtain the CBN’s license to operate a DFI and start business operations. Consequently, DLM consulted for the then interim management of the Bank in the organisational set-up of DBN and in the preparation of the required operational policy manuals/documents in line with the CBN guidelines and requirements.
