EIB, AfDB Back Private Sector Investment in Nigeria

• Float equity stakes in Development Bank of Nigeria
  

BY EDMOND ODOK, ABUJA – Determined to strengthen lending for business and agriculture investments in Nigeria, the European Investment Bank (EIB) and the African Development Bank (AfDB) have thrown their weight behind the establishment of the new Development Bank of Nigeria (DBN) in the country.

Already, the EIB has finalized a US $20 million equity stake in the new financing institution, alongside US $50 million equity participation from the AfDB.

Created by the Federal Government of Nigeria to address financing challenges hindering private sector investment in the country, the DBN plays an important and catalytic role in providing funding and risk sharing facilities to Micro, Small and Medium Enterprises (MSMEs) as well as small corporates. 

According to the bank’s Managing Director, Tony Okpanachi; “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. DBN’s ambition is strengthened by the financial and technical support of international partners, including the European Investment Bank and African Development Bank.”

Mr Okpanachi further explained that; “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.”

In his remarks, the Director, Financial Sector Development Department at AfDB, Stefan Nalletamby said; “Private sector businesses are critical to the development of the Nigerian economy as they possess huge potential for employment generation and output diversification. Nevertheless, there has been under-performance of these businesses and this has undermined their contribution to economic growth.”

However, Nalletamby listed shortage of finance, particularly investment finance, as key among many challenges affecting the bank’s performance, stressing that DBN “is expected to contribute towards mobilizing significant long-term funding to an important yet underserved sector with high development potential.” 

Also speaking in the same vein, EIB Vice-President, Ambroise Fayolle, stated that; “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.”

He said EIB is happy to support the new DBN towards strengthening private-sector investment in Africa’s largest economy, adding; “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.” 

Further amplifying the European Union (EU)’s commitment to support private-sector investment in Nigeria, Head of the EU Delegation to Nigeria and the Economic Community of West African States (ECOWAS), Ambassador Ketil Karlsen said; “The new backing for the Development Bank of Nigeria by both the European Investment Bank, the bank of the European Union and the African Development Bank, with 13 EU member state shareholders, will make a clear contribution to tackling the lack of access to credit by entrepreneurs and businesses across the country.”

Ambassador Karlsen stated that; “With more investment, we hope to promote a vibrant economy and stimulate growth, employment and increase opportunities, especially for youth.”