BARBARA BAKO, Abuja.
Development Bank of Nigeria Plc (DBN) is planning to set up by 2019, a subsidiary that will provide partial credit guarantees to lenders as the state-owned lender sees upsurge in credit to small businesses this year with new addition to the banks on its list.
Chief Executive Officer Tony Okpanachi said the new subsidiary which will take off with $35 million capitalisation will provide 50 percent guarantees for all credit disbursed through DBN.
Okpanachi in an interview in Abuja said funding for the new unit will be increased as it takes on more portfolios
“We already have all the regulatory approvals and we project that by some time in the middle of next year the company should come on board,” he said.
Less than 5 percent of Nigeria’s more than 37 million small- and mid-sized companies are able to access bank credit, according to Okpanachi. Providing credit guarantees may help curb the apathy that commercial banks have when it comes to lending to SMEs, he said.
Meanwhile, credit to small businesses is to surge after additional 15 banks signed up with the Development Bank of Nigeria Plc (DBN) to distribute facilities to small and medium sized companies..
The new addition brings to 22, the number of commercial banks that have signed with the state-owned lender to improve access to credit in Africa’s largest economy. Seven joined last year.
Okpanachi said the state-owned bank targets more loans this year, expecting to see lending to small- and medium-sized companies to reach “hundreds of billions of naira” in the coming years.
“We are going to see more up-tick from this July” as the newly signed-up lenders “bring their pipeline to us,” he said.
DBN debuted 2016 to plug a gap left by banks that are investing in Nigerian government Treasury bills that offer yields in excess of 14 percent and are considered less risky than providing credit to companies.
DBN has granted loans to about 10,000 small businesses this year, or half its target, Okpanachi said.
Backed by $1.3 billion of funding from the Nigerian government, the African Development Bank, World Bank and other international development-finance institutions, DBN is unlikely to require new funding for at least another three years, Okpanachi said.
Credit Guarantees
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