As part of a N100 billion bond issuing program, the Development Bank of Nigeria raised N23 billion in the first tranche. This money would be used to increase its assistance for MSME.
The 2028 due date instrument has a 14.4% interest rate. The bank is hoping that this would aid in bridging the MSME sector’s enormous financial deficit, which is essential for fostering inclusive growth and generating employment.
According to the executive of the wholesale lender, the N20 billion bond issuance received a 15% oversubscription, showing the market’s acceptance of the bank.
The bank, which is largely supported by institutional international and local owners, is soliciting money locally for the first time. By December 2022, the ban has given more than N631 billion to more than 313,000 MSMEs via its partners. The amount represented a little increase above the N482 billion distributed in 2021.
The new money the bank has raised is intended to boost performance since it will be used to increase its ability to finance the crucial sector.
Tony Okpanachi, the managing director of DBN, remarked that this was the bank’s first local boost since it started doing business. Okpanachi said the following during the signing ceremony in Lagos: “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 stated.
Ijeoma Ozulumba, the bank’s executive director and chief financial officer, said that the fund will likely help roughly 20,000 small enterprises.
