EIB, AfDB, provides $70m for private sector investment in Nigeria
The European Investment Bank, EIB, and the African Development Bank, AfDB, have both finalised arrangement to provide a US $70million equity stake in the Development Bank of Nigeria to strengthen lending for business and agriculture investment in the country.
A statement from the international banks, shows that the EIB and AfDB will be providing $20million and $50million equity participation respectively, in the financing institution to support private sector investment in Nigeria.
The Development Bank of Nigeria was inaugurated in 2015, by the Federal Government of Nigeria, to address financing challenges hindering private sector investment in the country.
The statement quoted the Managing Director of the DBN, Tony Okpanachi, as saying that “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. 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.”
“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. 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,” said Stefan Nalletamby, Director of the Financial Sector Development Department at the African Development Bank.
“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. 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,” said Ambroise Fayolle, Vice-President of the European Investment Bank.
The statement stressed that at present, new investment essential for companies to expand and create jobs is hindered by limited access to commercial banks. It added that the DBN estimates that only 5% of the 37 million entrepreneurs and small businesses in Nigeria that contribute to 50% of GDP can access credit in the financial system.
The European Investment Bank, EIB, is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.