The European Investment Bank (EIB), and African Development Bank, (AfDB) Thursday, in Abuja, said it has plans to support private sector investment in Nigeria with the establishment of Development Bank of Nigeria.
While European Investment Bank is contributing 20m USD in the new financing institution, ADB will contribute 50 million USD in equity participation.
The EIB and ADB’s agreement to support the creation of the new Development Bank of Nigeria is expected to strengthen lending for business and agriculture investment in Nigeria.
A statement issued by the European Union, (EU) and ADB, signed by Emeka Anuforo, ADB Director of Communication, in Abuja, shows that the Federal government established the Development Bank in order to address financing challenges hindering private sector investment in the country.
According to the statement, “The European Investment Bank has finalised the $20-million equity stake in the new financing institution, alongside $50-million equity participation from the African Development Bank.
“The Development Bank of Nigeria has been created by the Federal Government of Nigeria to address financing challenges hindering private sector investment in the country.
The Bank is also expected to play an important and catalytic role in providing funding and risk sharing facilities to micro, small and medium enterprises.
Tony Okpanachi, Managing Director of the Development Bank of Nigeria, said 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.
“The 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.
There has however been under-performance of the 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,” according to 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, adding that ” 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 (EIB).
The European Union is committed to supporting private-sector investment in Nigeria, especially with the new backing for the Development Bank of Nigeria by both the European Investment Bank, the bank of the European Union and the African Development Bank.
The 13 EU member state shareholders, will make a clear contribution to tackling the lack of access to credit by entrepreneurs and businesses across the country. With more investment.
“We hope to promote a vibrant economy and stimulate growth, employment and increase opportunities, especially for youth,” said Ambassador Ketil Karlsen, Head of the European Union Delegation to Nigeria and the Economic Community of West African States (ECOWAS).”