Development Bank of Nigeria

The Development Bank of Nigeria (DBN) is a wholesale development finance institution established by the Federal Government of Nigeria in collaboration with several international financial institutions, including the World Bank, African Development Bank (AfDB), European Investment Bank (EIB), KfW Development Bank (Germany), and the French Development Agency (AFD). Established in September 2014 and commencing operations in 2017, its primary mission is to alleviate the significant financing constraints faced by Micro, Small, and Medium Enterprises (MSMEs) and small corporates across Nigeria.

Core Mandate and Approach:

The DBN operates as a wholesale bank, meaning it does not lend directly to individual businesses. Instead, it provides long-term, low-interest funding and partial credit guarantees to eligible financial intermediaries (PFIs) such as commercial banks, microfinance banks, and other development finance institutions. These PFIs then on-lend to MSMEs, effectively increasing access to much-needed credit across various sectors of the Nigerian economy. This approach ensures a broader reach and leverages the existing financial infrastructure.

Key Objectives and Services:

The DBN aims to:

• Increase Access to Finance: By providing wholesale funding, DBN helps bridge the gap in long-term capital for MSMEs, which are often underserved by traditional financial institutions.
• Provide Partial Credit Guarantees: These guarantees encourage PFIs to take on more lending risk to MSMEs, thereby stimulating increased credit flow to the sector.
• Capacity Building: A crucial aspect of DBN’s mandate is to enhance the capacity of both MSMEs and PFIs. This includes training programs like the DBN Entrepreneurship Training Programme (DBNETP), which equips MSMEs with essential business skills, and support for PFIs to improve their ability and willingness to lend to the MSME segment.
• Promote Sustainable Development: Through its interventions, DBN contributes to diversified and inclusive economic growth, poverty reduction, and job creation in Nigeria. MSMEs are recognized as significant drivers of these outcomes.

Impact and Achievements:

Since its inception, DBN has made a substantial impact. It has reportedly disbursed over ₦1 trillion to more than 495,000 MSMEs across Nigeria, with a notable focus on women and youth-led businesses. Its efforts have also been linked to the creation of over 1.2 million jobs, demonstrating its critical role in stimulating economic activity and empowering entrepreneurs.

Funding and Partnerships:

The DBN’s operations are underpinned by a robust funding structure, with initial capital sourced from the Federal Government of Nigeria and significant contributions from its international development partners. These partnerships provide not only financial resources but also a diverse range of expertise, ensuring the bank’s ability to effectively support MSME growth and development.

In essence, the Development Bank of Nigeria serves as a vital catalyst for economic growth in Nigeria, by strengthening the MSME sector through improved access to finance, strategic capacity building, and a commitment to sustainable development.