German government-owned Development Bank, KFW has assured of a long term relationship with the Development Bank of Nigeria (DBN), which it sees as a natural partner through which Germany could strengthen Nigeria’s emerging Small and Medium Enterprise sub-sector.
Michael Wehinger, Director of West Africa and Madagascar at the KFW said his organization is ready to provide more funding for the DBN and expressed satisfaction with the operational model adopted by the newly established bank.
“For the time being, I think there is a lot of money on the table which has to be used. But our point of view is that this will be a long time relationship. We are of the view that as the need arises, in the future, we can extend our funding to DBN,” Wehinger said when he led a delegation of the KFW Development Bank of Germany on a visit to Nigeria’s Development Bank in Abuja, at the weekend.
KFW invested some $200 million as part of the $1.3 billion initial take off capital for the DBN.
Speaking on why the KFW decided to invest in the DBN, Wehinger said, “It was the wish of the KFW and the German government to support the bank which fosters and promotes SMEs activities because the Nigerian economy like others need the SMEs to grow.”
“When the Nigerian government took the decision to establish a Development Bank of Nigeria, we saw ourselves as a natural partner to the bank. We put our funds into it and we also put our knowledge into the process. I am happy all members of the delegation here have had the opportunity to share their views and review the progress in the establishment and operations of the DBN.”
On his assessment of the performance of DBN, the director said the DBN was making good progress.
According to him, “It is not easy to establish a bank from the scratch but it is a good opportunity to get things right and I think DBN is in a good position. It has taken up operations as we have been told and I think it is really a good progress towards financing SMEs in Nigeria.
“We are really satisfied that it is our sister institution. There was a lot of talks among management of our domestic partners and the management of the DBN. There is a lot to be shared and to be transferred from our own experience in KFW,” Wehinger stated.
“My impression is that they have been quite enriched and satisfied on that meeting. A lot of ideas have been brought up which can be implemented in the operations of DBN.”
The director, however suggested that in the future, his organisation would like DBN to expand its funding to include new areas like the renewable energy saving technology which would help SMEs to run more profitably.
Meanwhile, the DBN officials have indicated that they will sign on Deposit Money Banks (DMBs) and additional Micro Finance Institutions (MFIs) to participate in its on-lending before the end of the year. Already, the DBN has signed on three MFIs, taking off its lending activities with N 5bn to 20,000 SMEs.
The Managing Director, Tony Okpanachi said the DBN’s discussions with some DMBs and more MFIs had advanced and would culminate in signing deals with them, with a view to expanding the opportunities available to operators in the Small and Medium Enterprises (SMEs) sub-sector of the nation’s economy.
“Currently, we are in discussion with several of them. Before the end of the year, we are going to sign on more Micro Finance Institutions and some commercial banks. So we expect that before the end of the year, we will make more announcements as we tie them up,” he stated.
The MD said his team undertook a study tour to Germany in order to take advantage of the long experience of KFW which in order to run a sustainable development bank in Nigeria.
His words, “About September, we undertook a study tour to KFW to understand, because we are more like sister firms, working together. So we undertook a study tour there to be able to understand how they have been able to sustain this model for all these years.
“The culmination of that is the technical support that came from them and experience sharing with us, in addition to the funding they provided for us.”
“We want the assistance to continue. They have a long history of successful operations and DBN wants to learn a lot from them. We want a continuous assistance from them. We want their willingness to support us as we continue in the journey.”
