DBN raises N23 billion to support MSME lending

 

 

The Development Bank of Nigeria has raised N23 billion in the first tranche of its N100 billion bond issuance programme to consolidate its support to micro, small and medium-scale enterprises (MSME).

The instrument that will be due in 2028 is at 14.4 per cent. The bank hopes it would help in closing the huge funding gap in the MSME sector, which is critical for building inclusive growth and creating jobs.

The N20 billion bond issuance, according to the executive of the wholesale lender, was oversubscribed to the tune of 15 per cent – a demonstration of the bank’s market acceptance.

It is the first local funding-raising outing of the bank, which is majorly funded by institutional foreign and local shareholders. The ban had disbursed over N631 billion to more than 313,000 MSMEs through its partners as of December 2022. The value was a modest increase from N482 billion disbursed in 2021.

The fresh fund raised by the bank is targeted at increasing the performance as it would be used to expand its capacity to provide funding for the critical sector.

Managing Director of DBN, Tony Okpanachi, noted that the issuance was the bank’s first local raise since it began operation. Speaking at the signing ceremony in Lagos, Okpanachi said: “So we have mobilised capital from outside the shore of Nigeria. That was the first step. As an institution going forward, we will also be able to catalyse some fundraising within the economy itself to lend to the MSMEs.

“We are expanding our funding base beyond the development partners we received funding from. Now we are raising funds, locally because if you remember, the need for that segment in the economy is huge.

“In the last six years, we have been doing that and the initial funding we have raised for DBN has come from our development partners. So we have mobilised capital funds from outside the shore of Nigeria. That was the first step. As an institution, going forward we will also be able to catalyse some fundraising within the economy itself to lend to the MSMEs. What we have done today with this our debut bond is N100 billion, but the first series is N20 billion (oversubscribed by N3 billion). It will enable us to raise money locally, to be able to provide funding for MSMEs through our wholesale model,” he said.

Executive Director and Chief Financial Officer of the bank, Ijeoma Ozulumba, said the fund would likely benefit about 20,000 small businesses.