DBN To Provide Credit Guarantees, Targets N60bn Loans

The Development Bank of Nigeria Plc plans to set up a subsidiary that will provide partial credit guarantees to lenders, while targeting as much as N60bn ($166m) of loans this year.

The Chief Executive Officer, DBN, Tony Okpanachi, was quoted by Bloomberg as saying in an interview that the unit would have $35m of start-up funding, and would become operational in a year.

He said funding for the unit, which will provide 50 per cent guarantees for all credit disbursed through the DBN, would be increased “as it takes on more portfolios”.

Okpanachi stated that the bank signed up 15 banks this year, in addition to the seven that joined in 2017.

According to him, lending to Small and Medium-sized Enterprises is expected to reach “hundreds of billions of naira” in the coming years.

He stated that less than five per cent of Nigeria’s SMEs were able to access bank credit, adding that the provision of credit guarantees might help curb the apathy of commercial banks in terms of lending to SMEs.

Okpanachi stated, “It is expected that loans to small businesses would surge after the number of banks signing up to disburse the facilities more than doubled. We also expect lending to SMEs to reach hundreds of billions of naira in the coming years.

“The DBN seeks to fill the gap left by banks that are investing in Nigerian government Treasury bills and offering yields in excess of 14 per cent instead of providing credit to companies. The DBN has granted loans to about 10,000 small businesses this year.”