Why FG launched Development Bank of Nigeria (DBN)
Ladies and gentlemen. I am excited to welcome you all to this event and I thank you for making out time to be here to mark this great moment with us. Some of you have travelled long distances to be here today and we are indeed, deeply grateful to you for that.
This is a very exciting day because it marks the momentous launch of the Development Bank of Nigeria (DBN), an initiative of President Goodluck Ebele Jonathan’s Administration, which is set to usher in a new era of robust private-sector led financing for our small businesses. It is well known that lack of access to finance and the high cost of finance are a major deterrent to the growth and development of Micro, Small and Medium Sized Enterprises (MSMEs) in Nigeria.
This launch of DBN today is a result of Mr. President and Mr. Vice President’s concerted attempts to help the SME sector. In 2013, Mr. Vice President set up a working group under the National Council on Privatization (NCP), this working group came up with the recommendation, in addition to several other recommendations, that Nigeria needs a strong Development Finance Institution that will further open up access to finance for our micro, small and medium enterprises.
All over the world, development banks are set up to provide long-term finance (debt or equity) which commercial banks and the capital market cannot, or will not provide. Aside the development of small businesses and the encouragement of entrepreneurial activity, the broader aim of Development banks include the redistribution of income between social classes, diversification of industry, and of course, job creation.
As far as achieving these objectives are concerned, development banks have recorded mixed results but studies have also identified specific traits and characteristics that have allowed development banks to succeed. These traits include: having a clear mandate, being held to high standards of transparency, having adequate initial capitalization, and having strong internal governance such as an independent board, amongst others.
We considered all these factors in setting up our development bank and I can assure you that our DBN not only took the best practices from global success stories, but improved on them. Mr President, Distinguished Ladies and Gentlemen, I am pleased to say our DBN is one of a kind and has set a standard that will be replicated in years to come. This is confirmed by the quality of international institutions that are providing capital and participating in the DBN. There is no other DFI launched in recent times that has attracted such interest.
All through the journey to set up the bank we have been supported by our various development partners. I wish to use this opportunity to extend our profound gratitude and appreciation for the strong support that we have received from the DFID represented here today by ——————, World Bank represented here today by —————, African Development Bank represented today by ——————-, Agence Française de Développement (AFD) represented by ————————and KfW (Germany), ably represented here today by …………… We thank you all so much for standing with us, supporting us and also partnering with us on this project that will re-ignite growth of the most critical segment of our economy. We would also like to thank our internal project teams from the Ministry of Finance, BPE, CBN, Budget Office, Commercial Banks and of course, our advisors, PricewaterhouseCoopers who all worked very hard to get us a Development Finance Institution that Nigerians, and indeed the rest of the world would be proud of.
I share in the President’s belief that the most valuable change we can make as a government is ensuring that we break this jinx so that small businesses can actually have a full-fledged institution that will provide this access. Not just access, but access in a manner that does not stifle them but instead grows them; access that gives them space to afford a decent life while nursing their businesses; access in a manner that will not take substantial portions of their profits away from them; access to the sort of finance that empowers them and their communities. Simply put, access to credit means financial inclusion, financial inclusion helps convert people’s dreams to reality. This is the reason why we are here today, this is the reason why the President is also here, to launch the flagship bank that gives all Nigerians a chance not only to dream….but to also see that dream become reality!
Ladies and Gentlemen, as we await the launch by the President, I will like to say that our collective determination to see this vision succeed is evidence of our belief that the greatest wealth of this country is in the ingenuity of our people, the creativity of our youths, the industry of our women, the resilience of our men and the dynamism of the average Nigerian citizen who is out there, trying to take charge of his or her destiny.
I thank you all.
• Dr. Okonjo-Iweala, Coordinating Minister for the Economy and Minister of Finance, delivered the address above at the launch of Development Bank of Nigeria (DBN) at the Presidential Villa, Abuja on March 23, 2015.