The European Investment Bank and the African Development Bank have agreed to support the creation of the new Development Bank of Nigeria to strengthen lending for business and agriculture investment in the country.
The European Investment Bank has finalized a US $20-million equity stake in the new financing institution, alongside US $50-million equity participation from the African Development Bank.
“The Development Bank of Nigeria will overcome the funding gap in the micro-, small- and medium-scale enterprises space and help businesses unlock opportunities across Nigeria,” said Tony Okpanachi, Managing Director of the Development Bank of Nigeria.
“DBN’s ambition is strengthened by the financial and technical support of international partners, including the European Investment Bank and African Development Bank. The new institution builds on international experience and uses a business model that has demonstrated proven success to enhance private-sector investment across Africa and around the world where other financing options are inadequate or absent.”
The Development Bank of Nigeria has been created by the Federal Government of Nigeria to address financing challenges hindering private sector investment in the country.
The Bank is called to play an important and catalytic role in providing funding and risk sharing facilities to micro, small and medium enterprises as well as small corporates.
“Private sector businesses are critical to the development of the Nigerian economy as they possess huge potential for employment generation and output diversification,” said Stefan Nallentamby, director of financial sector development department at AfDB.
“Nevertheless, there has been under-performance of these businesses and this has undermined their contribution to economic growth. Among the issues affecting their performance, the shortage of finance, particularly investment finance, occupies a very central position. The Development Bank of Nigeria is expected to contribute to mobilizing significant long-term financing to an important yet underserved sector with high development potential.”
“New private sector investment is crucial to create jobs and enable business to expand and limited access to long-term financing holds back economic growth. The European Investment Bank is pleased to support the new Development Bank of Nigeria to strengthen private-sector investment in Africa’s largest economy,” said Ambroise Fayolle, Vice-President of the European Investment Bank (EIB).
“We look forward to continued close cooperation with Nigerian and international partners to ensure that once fully operational the new Development Bank of Nigeria can help harness the country’s economic potential.”
