• Monday, June 24, 2024
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DBN disburses N512bn loans in 5 years to MSMEs

Why DBN’s N5bn lending scheme deserves accolades

The Development Bank of Nigeria (DBN) has successfully disbursed over N512 billion in loans to no less than 225,000 Micro, Small and Medium Scale Enterprises (MSMEs) in Nigeria since its establishment five years ago.

This was revealed at the bank’s third annual lecture series, themed ‘MSMEs; thriving in the face of domestic and global disruptions’, held in celebration of its fifth-year anniversary in Abuja on Thursday. The availability of the loans also enabled the creation of over 150,000 jobs in the economy.

Shehu Yahaya, chairman of DBN, said MSMEs occupy a critical part of the Nigerian economy and contribute 48 percent to Nigeria’s GDP, adding that the country could be transformed from a consuming to a producing nation through the activities of the subsector.

“The strategy is to overcome MSMEs’ major challenges and transform them into a major fulcrum for the transformation of the Nigerian economy so that they are at the centre of technological innovation and transformation, local value addition, non-oil export drive with dynamic linkages to larger enterprises, and a veritable engine for job generation,” he said.

According to Yahaya, the bank has a five-year strategic plan of expanding its reach, exploring new channels, and advocating for MSMEs, among other things.

He said the bank had extended engagements with critical stakeholders in advocating for enabling policies that promote the growth and development of essential segments of the economy.

He described the DBN Annual Lecture Series as one of the ways the bank continues to engage with all stakeholders to search for solutions and influence policies aimed at addressing the constraints faced by MSMEs, especially as it relates to access to finance and building their capacity to upscale sustainably.

Tony Okpanachi, chief executive officer of DBN, raised the concern that MSMEs find themselves frequently affected by unpredictable external factors such as natural disasters, climate change issues, disease outbreaks, technological and cyber changes, trade disputes, policies, all manner of global disruptions, which have had an immense impact on local businesses.

“The future of work is currently in a state of flux, with many old and new challenges hitting MSMEs particularly hard,” he said, urging governments, corporate bodies, and individuals, mostly MSMEs, to find ways to adapt to the changing times and the volatility of the market, deal with uncertainty, and figure out how to convert that into opportunities.

“It is, therefore, imperative for us as a bank to champion the conversation on how MSMEs can prosper despite the odds, by exposing ways through which MSMEs can adapt in these times,” he said.

Vice-President Yemi Osinbajo, in his address, commended DBN for facilitating access to finance and overseeing the disbursement of loans as it was created as a wholesale development bank to address funding challenges for businesses and has been a major driver of MSME growth in the country.

He said with this progress, the federal government was ready to institute more policies to help MSMEs thrive, which will be part of the provisions of the 2022 Finance Act that has reached an advanced stage in preparation.

He also said that the government has prioritised policy support for the robust growth of MSMEs in the National Development Plan 2021-2025 across the key sectors of the economy.

According to Osinbajo, MSMEs contribute significantly to the economy, accounting for 96.7 percent of businesses and 46.31 percent of national GDP but accounts for 6.21 percent of gross exports, which is relatively low and of great concern to the government.

Read also: Osinbajo urges sustainability of Buhari’s MSME legacy

“The relatively low contribution of MSMEs to exports is concerning given their significant contribution to nominal GDP and for this reason, urgent steps are being taken to alleviate the binding constraints limiting MSME participation in cross-border trade,” he said.

He said efforts are ongoing to ensure MSMEs are positioned to take advantage of the African Continental Free Trade Area, adding that the Ministry of Finance, Budget and National Planning is collaborating with the Federal Ministry of Trade and Investment, Nigerian Export Promotion Council and other relevant Ministries, Departments and Agencies to remove critical binding constraints to entry of MSMEs into export markets.

Osinbajo, who was represented by Zainab Ahmed, minister of finance, budget and national planning, said the Finance Act, which is one of the main policy tools used by the government to amend relevant tax, excise and duty statues, will continue to improve and create opportunities for businesses to thrive and expand.

He recalled some provisions of the previous Finance Acts that helped businesses such as tax exemptions to small businesses, tax cuts on the taxable profits of medium-sized companies to 20 percent, and granting a 2 percent bonus medium-sized companies that pay taxes 90 days before the due date.