N1.3trn Needed To Adequately Fund MSME Sector – Okpanachi
The Managing Director of Development Bank of Nigeria (DBN), Mr. Tony Okpanachi has said about N1.3 trillion funding is needed to realise the country’s potential in the micro, medium and small enterprises (MSME) sector of the nation’s economy.
A virile MSME is key to the growth of any economy and the Nigerian government over the years has been making efforts to ensure funding for the sector. The efforts include setting up of financial institutions that can extend loans specifically to the sector. DBN was established in 2017 to provide longer term loans for MSMEs.
While DBN has started well, surpassing its projection in the first year of operations, Opanachi said other sources are needed to be able to adequately meet fund needs of the sector and unleash its potential on the economy.
Speaking to journalists in Lagos, the DBN boss said the need of the sector is over N1.3 trillion.
“All the intervention funds currently available put together cannot scratch the surface. It has to be a combination of borrowings from various sources and vehicles. There is no harm in many sources. So the National Microfinance Bank (proposed by the Central Bank of Nigeria) will also help. The intervention funds we have now will help to encourage the sector. The need of the segment is too much for one source of funding to satisfy.
“So the Microfinance Bank will be another source of the reach the MSME. The more the merrier,” he said.
Opanachi said on its part, the DBN will continue to support the MSME sector with the funding currently available while working out other ways to improve on the support. According to him, the bank disbursed N31.36 billion to 35,000 MSMEs in 2018, which was the first year of its operations, while it is projecting N70 billion this year.
“Our total disbursement-todate stands at N31.364 billion thus exceeding our year end projection of N30 billion. Total number of end borrowers stands at 35, 000 which also exceeded our year-end target of 20,000 MSMEs.”
Encouraged by the achievement recorded in the first year, the DBN boss said the bank’s disbursement target for the year 2019 is N70 billion, which he stressed would help deepen the bank’s penetration in the MSMEs sector of the economy.
“We are not sector-specific and as long as you have the potential to create employment, you have potential to empower and make development impact, DBN will fund you. We also know that some sector has more growth potential so as we go down we try to encourage those sectors,” he said.
Opanachi also disclosed that so far the bank has zero-nonperforming loan(NPL), explaining that it has developed an in-house Credit Rating Model, which was validated by Dun & Brad Street.
“We have similarly put in place a number of risk management policies such as: framework for lending to finance companies and mortgage banks, related party credit policy; information security policy and business continuity policy,” he said.
The DBN boss said they just don’t give out money to PFIs but also know the MSMEs that are end borrowers and monitor their operations.
“We don’t just give the money to PFIs. What we do if PFIs bring their transactions, we know who the borrowers are, we have their details, who they are, what they do upfront. So by the time we give the money to PFIs and they on lend we go again to monitor,” he said.