The bank aims to support small-scale businesses with loans of varying lengths at lower interest rates than currently available as the country contends with its first recession in 25 years.

The finance ministry said approval for the licence was subject to meeting the minimum capital requirement of N100 billion  ($326 million), the reconstitution of the bank’s board and a review of the organisation’s structure.

The development bank has $1.3 billion in seed money provided by the World Bank, African Development Bank and German state bank Kfw, the finance ministry said on its Twitter feed.

The government “expects that the influx of additional capital from the DBN will lower borrowing rates and the longer tenure of the loans, will provide the required flexibility in the management of cash flows”, the finance ministry said in a statement.

The ministry has previously said that 50 percent of the GDP in Africa’s largest economy is made up of small companies.