SME financing with the Nigerian Development Bank

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Micro, small and medium-sized enterprises (MSMEs) contribute the largest part of Nigeria's economic output and are together the largest employer in the country. However, less than 5% of MSMEs have access to adequate loans or financial services and are therefore often forced to resort to informal financing. With the aim of creating better financing options for the Nigerian economy and MSMEs in particular, the Development Bank of Nigeria (DBN) was founded in March 2015 by the Nigerian government in cooperation with several global development partners. KfW served as a model for the institutional development of the bank and with this project (promotional loan of USD 200 million) is making a key contribution to the sustainable refinancing of the DBN. The DBN supplies local partner financial institutions (PFIs) with financial resources through its refinancing lines. This enables PFIs to grant more loans to Nigerian MSMEs and thus improve their access to the financial sector. The Nigerian private sector is revitalized and the economy stabilized, while at the same time conflicts can be reduced through the creation of jobs. In addition, the DBN provides technical support and advice for PFIs and MSMEs. Its fully independent subsidiary IMPACT Credit Guarantee Limited (ICGL), founded in 2019, provides loan guarantees to PFIs and provides further technical support in this area. The target group of the project is Nigerian MSMEs, with the funding policy focus on supporting labor-intensive economic sectors, including agriculture. In addition to the World Bank and the Nigerian government as project initiators, the African Development Bank, the French Development Agency and the European Investment Bank are other investors.