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FG wants DBN to expand funding windows for affordable financing to more MSMEs

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The Federal Government has called on the Development Bank of Nigeria(DBN) to expand its funding windows to provide affordable financing to a wider cross-section of Micro Small and Medium Enterprises(MSMEs) in the country.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed made the call on Thursday, at DBN’s 3rd Annual Lecture Series with the theme: ‘Thriving in the Face of Domestic and Global Disruptions”, in Abuja.

Ahmed stressed that the impact and disruptive effects of the Russia-Ukraine war on the economy, and on the cost of doing business, has increased the challenges confronting MSMEs, hence the need to ensure MSMEs are supported in the acquisition of skills and tools to run their businesses efficiently, manage risks and gain access to finance at competitive and affordable rates.

She however commended DBN for it’s achievement so far. “Through its work providing wholesale funding and risk-sharing facilities to Participating Financial Institutions (PFIs) for on-lending to MSMEs, the DBN has distinguished itself as a key contributor to unlocking the capacity of MSMEs to catalyse economic growth and job creation in the Nigerian economy.

“This underscores the important role played by the DBN in facilitating access to finance and with a total loan disbursement of N482 billion to 208,000 MSMEs in 2021, of which 27 percent are youth-owned while 66 percent are owned by women, the DBN continues to be a major driver of MSME growth in Nigeria”, she said.

While expressing concern over the low contribution of MSMEs to exports, given their significant contribution to nominal GDP, the Minister assured that urgent measures were being put in place to alleviate the binding constraints limiting MSME participation in cross-border trade.

In his welcome address, Managing Director, DBN, Dr. Tony Okpanachi assured that despite the adverse effect of domestic and global disruptions on MSMEs in Nigeria, the bank would continue to empower and drive the critical sub-sector of the economy to deploy innovative strategic solutions in the management of their businesses.

The Bank also assured of its continuous partnership with its Participating Financial Institutions (PFIs) to eliminate the financing constraints faced by MSMEs..

“In Nigeria, we’re currently plagued with rising inflation of 20.52% (as of September 2022). We are as well afflicted with rising food and commodity prices, coupled with the rising and unstable exchange rates among others.

“The effects of Global disruption on international trade often come as a shock to businesses. These series of events have led to uncertainty and radical changes to companies’ well-established strategies across the globe and MSMEs are not exempted.

“The future of work is currently in a state of flux, with many old and new challenges hitting MSMEs particularly hard. Hence, Governments, corporate bodies, and individuals, mostly MSMEs must find ways to adapt to the changing times and the volatility of the market, deal with uncertainty, and figure out how to convert that into opportunities”, Okpanachi posited.

The DBN boss noted that because Micro, Small, and Medium Enterprises were responsible for more than two-thirds of all jobs worldwide, the onus was on the development bank to evolve strategies on how MSMEs can prosper, by exposing ways through which MSMEs can adapt in these times.

In his remarks, Chairman of the Bank, Dr. Shehu Yahaya, said the focus of this year’s Annual Lecture, was to “combine our efforts with all other stakeholders to develop ideas, policies, programs, and projects to boost growth, bolster macroeconomic frameworks, reduce financial vulnerabilities, provide support to vulnerable population groups, and reduce the long-term impacts of the global shocks of recent years.

“MSMEs occupy a critical part of the Nigerian economy and contribute 48% to Nigeria’s GDP. Through the activities of this subsector, Nigeria can be transformed from a consuming to a producing nation”, he said.

According to Yahaya, the “strategy is to overcome MSMEs’ major challenges and transform them into a major fulcrum for the transformation of the economy to technological innovation and transformation, local value addition, non-oil export drive with dynamic linkages to larger enterprises, and a veritable engine for job generation”.

He expressed DBN’s commitment to work towards building the capacity of MSMEs to eliminate the financing constraints faced by the critical sector of the economy and transform them into instruments for positive and sustained change.

The DBN Annual Lecture Series is one of the ways the bank engages with all stakeholders to seek solutions and influence policies aimed at addressing the constraints faced by Micro, Small, and Medium Scale Enterprises especially in the areas of access to finance and building their capacity to upscale sustainably.

The DBN was established in collaboration with key development partners to address the financing challenges facing Micro, Small and Medium Enterprises (MSMEs) in Nigeria.

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