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DBN disburses N191bn loans to MSMEs in 12 months, onboards more PFIs

Loan disbursement by the Development Bank of Nigeria (DBN) in 12 months surged 89 percent from N101.5bn in 2019 to N191.7bn in 2020, the bank said in its 2020 financial report.

The newly released result also indicated a 4 percent growth in total assets from N474.7 billion in 2019 to N493.5 billion in 2020.

The mix of earnings assets showed more loans than investments as the bank continues to ramp up lending to small businesses in Nigeria which are the engine of growth of the economy.

Consequently, outstanding loans increased by 110 percent to N214.0bn in 2020 from N101.9bn in 2019.

Development Bank of Nigeria, a wholesale finance institution, was set up to alleviate financing constraints faced by the Micro, Small and Medium Enterprises (MSMEs) in the country by providing long-term financing and partial credit guarantees to eligible financial intermediaries on a market-conforming and fully financially sustainable basis.

The growth is therefore in line with its core mandate of facilitating sustainable socio-economic development by improving financial access for MSMEs in Nigeria.

“By onboarding more Participating Financial Institutions, we were able to deepen financial inclusion for more MSMEs whose businesses were adversely affected by the pandemic, thereby injecting a new lease of life and providing the right environment for their sustained growth,” Tony Okpanachi, managing director/chief executive officer, said on the bank’s activities and contribution to the Nigerian economy during the pandemic year.

“We will continue to focus on our core mandate of driving developmental impact,” he added.

The bank’s income from loans also grew significantly by 60 percent year-on-year from N6.6bn in 2019 to N10.5bn in 2020. Return on assets and return on equity stood at 4 percent and 11 percent, respectively, for the year ended December 31, 2020.

Several cost containment strategies were deployed by the bank resulting in a 12 percent decrease in operating expense year on year.

The bank’s earnings remained strong at N34.6bn in spite of the harsh global realities brought about by the COVID-19 pandemic as well as other macroeconomic challenges encountered during the year.

Okpanachi said the bank worked through its Participating Financial Institutions (PFIs) to facilitate increased lending to MSMEs, thereby accelerating economic growth.

He also expressed optimism in the bank’s capacity to weather the effects of the global pandemic and other challenges.

“We appreciate the full cooperation of our board, management, staff, and other stakeholders as we were able to operate within strict health and safety guidelines, while increasing our reach to our target market,” Okpanachi said.

DBN was established by the Federal Government of Nigeria in collaboration with global development partners, including the World Bank, AfDB, KfW, AFD, and EIB, to address major financing challenges facing Nigeria’s MSMEs.

It performs this function by providing financial institutions, predominantly deposit money and microfinance banks, with on-lending facilities designed to meet the needs of this segment.

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