X-raying DBN’s Commitment to SMEs

Nume Ekeghe writes on Development Bank of Nigeria’s (DBN) support for Small and Medium Enterprise in the past five years and its commitment towards fostering inclusive and sustainable growth.

Over the past five years, the Development Bank of Nigeria (DBN) has been a crucial contributor to the growth and development of Micro, Small, and Medium Enterprises (MSMEs). As part of its role as a development finance institution, DBN has provided a substantial sum of over N230 billion to support SMEs across Nigeria. With a firm commitment to fostering sustainable growth, DBN aims to continue its efforts in driving the nation’s economic development trajectory. Through its initiatives, the bank seeks to empower MSMEs and contribute to the overall progress of the Nigerian economy.

The Managing Director and Chief Executive of the bank, Dr Tony Okpanachi, reechoed this at a media parley in Lagos recently where he noted that DBN plans to continue to leverage its strengths, whilst building viable partnerships and exploring new opportunities for impact to ensure that it remains a catalyst for sustainable development. According to him, the drive to provide funding for MSMEs in the country had seen the DBN providing financing support to its participating financial institutions to the tune of N631 billion as of December 2022. “Over 313,000 MSMEs have benefited from this support, leading to the creation of more than 900,000 jobs. These numbers signify hope and prosperity for countless individuals and families across the nation, ”he said.

Supporting Micro, Small Businesses

Okpanachi noted that the support for SMEs in the country had become expedient as more than 80 per cent of the entire population of Nigeria, “which is more than 160 million Nigerians, depends on the informal economy. This means that the Trade and Commerce sector is the hope of daily survival and livelihood for most Nigerian families and entrepreneurs. He said, “DBN recognizes this critical need. As such, more than N230 billion have been channelled to support small businesses in the Trade and Commerce sector over the past five years leading up to December 2022.” Asides from this, Okpanachi said in addressing the food challenge in the country, the DBN had provided facilities towards the agricultural sector.

The DBN CEO quoting the Food and Agriculture Organisation of the United Nations (FAO), noted that Nigeria is at the cusp of a food crisis and millions of Nigerians will likely experience acute hunger in 2023 as climate adversely affects the production of food crops. “Indeed, supporting small businesses in the agriculture sector is crucial for improving food security in Nigeria. The Development Bank of Nigeria (DBN) recognizes the significance of agriculture in the country’s economy and has allocated substantial funding to agro- MSMEs.

As of December 2022, the Bank has provided N27 billion to Agro-MSMEs. “This funding has played a vital role in supporting agricultural activities, empowering farmers, and promoting agro-entrepreneurship. The financial support provided by DBN has helped agro-MSMEs to enhance their operations, invest in modern farming techniques, acquire machinery and equipment, expand their production capacity, and access new markets. “The Development Bank of Nigeria (DBN) has extended its financing support beyond just agriculture to various other sectors, recognizing their importance in the overall development and prosperity of the Nigerian economy, “he said. “DBN has provided N13 billion in financing support to MSMEs operating in the hospitality and tourism sector.

This funding has helped these businesses to expand their operations, improve infrastructure, enhance service quality, and contribute to the growth of Nigeria’s tourism industry. “We have also allocated N12 billion in financing to support quality education in Nigeria. This funding has been instrumental in improving educational facilities, promoting skill development programs, and enhancing access to education across the country. “DBN has channeled N11.5 billion in financing support to the health sector, aiming to improve access to healthcare services and enhance the health conditions of the Nigerian populace.

This funding has supported the development and expansion of healthcare facilities, the procurement of medical equipment, and the training of healthcare professionals, “he added. Okpanachi further added that, “DBN recognizes the immense potential of technology and innovation in driving development and digital transformation across sectors. Therefore, it has allocated N11 billion to the technology sector, supporting businesses involved in technology and innovation initiatives.This funding aims to foster increased efficiency, productivity, and expanded market access for Nigerian businesses.

” Providing Specialized Offerings

Furthermore, he said “DBN, over the years has taken a customer-centric approach to product development, helping the Bank to meet the diverse needs of different segments and regions within the MSME ecosystem. From our discovery, the challenges of different MSME actors and their needs differ. DBN has maintained its strong commitment to innovative product development to address these gaps, developing specialized offerings such as the Long-Term Finance (LTF) product to support the PFIs in providing longer-tenor financing to the end-borrowers. “The Bank also developed the Green Finance product to support businesses facilitating green transitions through renewable energy, sustainable agriculture, sustainable waste management, and so on. The Non-Interest Banking (NIB) product was developed to support small businesses, particularly those that are financially excluded and located in economically challenged regions. “The Gender Finance Framework developed by the Bank is another attempt to increase the share of women entrepreneurs benefiting from our financing. Over the years, these specialized solutions have enabled us to catalyse more impact on the last-mile enterprises, improve access to finance, and support the development of MSMEs across different segments and locations.”

Building Capacity

On capacity building, he said, “We recognize that strong, structured, and sound financial institutions are pivotal to the success of Nigerian MSMEs. To this end, we have diligently worked to strengthen the capacity of our PFIs to deliver on the mandate of alleviating financing constraints among Nigerian MSMEs. “Through a technical assistance program implemented by the prestigious Frankfurt School of Finance and Management, we have empowered 20 PFIs by augmenting their processes and deepening their ecosystem knowledge of Nigerian MSMEs.

This collaborative effort has therefore enhanced the PFIs’ ability to adequately meet the needs of MSMEs, creating a thriving ecosystem for sustainable growth. “Also worthy of note is that the Development Bank of Nigeria has forged invaluable partnerships, including collaboration with Google Nigeria, the Entrepreneurship Development Centre (EDC) of the Lagos Business School, and other esteemed organizations to deliver capacity-building programs to Nigerian MSMEs. “In 2022, we took a significant step in empowering Nigerian entrepreneurs by developing a state-of-the-art Learning Management System (LMS) designed to facilitate their upskilling and continuous learning journey These efforts have culminated in the training of more than 4,000 MSMEs as of December 2022, equipping them with the necessary knowledge and skills to overcome financing challenges and drive their growth aspirations.

Sustainability, Climate Action

As a responsible and sustainability-driven institution, Okpanachi said DBN also recognize that there is a need to support the fight against climate change. Climate change has far-reaching implications. Key sectors such as agriculture, energy, water resources, and infrastructure face significant disruptions. “Extreme weather events and rising sea levels damage critical infrastructure, disrupt supply chains, and increase the costs of disaster response and recovery. The economic stability and sustainable development of Nigeria are also heavily dependent on addressing climate change. This is why DBN has actively embraced initiatives to promote environmentally friendly practices and increase its support for businesses in the Green economy.

“We have actively been participating in global climate change forums, including COP26, COP27, and Finance in Common Summit where we demonstrate our commitment to addressing climate change and financing sustainable development. In addition, we have established Green Clubs in some secondary schools in Nigeria, to instill environmental consciousness in the younger generation. DBN is also undergoing the accreditation process to be the first Direct Access Entity (DAE) to the Green Climate Fund. Through offerings like the Interest Drawback Program, we also incentivize lending to green and environmentally friendly businesses, contributing to a greener and more sustainable future, “he added.

Future Outlook

DBN’s CEO noted that the bank in the coming years remains determined to be a growth catalyst as they continue to expand on partnership with banks and key stakeholders. He said: “We remain resolute in our commitment to even greater heights as we celebrate these achievements. While acknowledging the hurdles that lie ahead, we embrace them as gateways to transformation, innovation, and a greater sphere of influence. We will continue to leverage our strengths, build viable partnerships, and explore new opportunities for impact, ensuring that the Development Bank of Nigeria remains a catalyst for sustainable development.” “In conclusion, I extend my heartfelt gratitude to the Board of Directors, our esteemed shareholders, the Central Bank of Nigeria, our valued PFIs, and the entire DBN team for their unwavering support, resilience, and dedication. Together, we have achieved these significant milestones and together, we will continue to foster sustainable growth and drive the nation’s economic development trajectory to unprecedented heights.”