Opinion: How FG plans to ensure citizens benefit from Nigeria's development bank By Peter T. Udo-Akpan

Editor's note: In this piece, Peter T. Udo-Akpan writes on new strategies developed by Nigeria's Development Bank.

According to Udo-Akpan, the institution has made good progress on delivering on its mandate.

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The phone rings. A customer is calling in with a large new order for the young struggling hardworking fashion entrepreneur. He wants it delivered immediately. For the entrepreneur, it’s a potential game-changer, a breakthrough.

But there is a problem. The entrepreneur does not have the resources to deliver. Desperate, he starts making frantic calls.

His father, enjoying a game of draughts, can’t help. His sister, busy with a delicious meal at a fancy restaurant, is irritated by the interruption quickly ends the call and goes back to her food.

But a happy ending is lurking around the corner. The Development Bank of Nigeria (DBN), represented by its Managing Director, the rigorous and professional Tony Okpanachi who makes a cameo appearance, comes to the rescue with a timely, structured loan at a competitive rate. The entrepreneur is able to meet the customer’s order.

His fortunes are transformed and at the launch at his new repackaged business, his father and sister are present with others to celebrate with him. Cut!

The television commercial, like other components of the ad campaign recently launched by the Development Bank of Nigeria, blends an engaging directness with a disarming Nollywoodish freshness. Best of all, it communicates.

The entire campaign - print, radio, and television - with a dash of below-the-line elements is clear about its objectives and focuses on them like a laser beam.

Its bold creativity is directed at communicating the opportunity that DBN represents to its most important target audience: serious entrepreneurs like the fashion designer whose talent and potential is hamstrung by lack of resources.

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This directness can also be seen in the full page, colour print ad “How to get a DBN Loan” which sets out the steps which entrepreneurs like the fashion designer in the television commercial should follow to access facilities from the institution. They are:

1. Visit your bank: commercial bank, micro-finance bank, development finance institution and any other financial institution and indicate that you want to apply for a DBN loan

2. The bank appraises the business and loan purpose and if the bank’s assessment is favourable, it applies to the DBN for funding

3. If DBN approves the loan, DBN will disburse to the bank for on-lending to end borrowers.

Understandably, the print ad gives prominence to the qualification criteria. It clearly spells out that “all MSMEs involved in productive enterprises are eligible for the loan.” But the ad copy is also fastidious in making the point that, to qualify, the MSMEs “must be customers of eligible participating financial institutions (PFIs)”.

This is an important clarification because DBN does not fund them directly but only through PFIs - commercial banks, microfinance banks, development finance institutions, and other approved financial institutions.

The print ad also highlights crucial positives of DBN loans: the flexibility of their tenor – up to ten years with a moratorium period of 18 months.

To underscore the competitiveness of DBN loans, the ad makes a bold claim: “The interest rates are on a market-conforming and fully financially sustainable basis.” In other words, DBN loans are very market friendly.

The English and pidgin radio commercials constitute another important component of the DBN ad campaign. The lead character in the pidgin version is a young male entrepreneur while the English version features a young female entrepreneur. But the plot and the message share the same direct efficacy with the television commercial.

The entrepreneur’s efforts to get an urgent loan are ignored by family members, friends and the in case of the female entrepreneur, her boyfriend. In the nick of time, a voice over extolling DBN’s virtues some on to educate the frustrated entrepreneurs about the DBN opportunity. The rest is happy history.

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The timing of the campaign is significant. It is coming about a year after DBN formally commenced lending activities. Within this period, the institution has made good progress on delivering on its mandate.

And make no mistake about it, this mandate is a critical one with profound implications for the present and future health and prosperity of the Nigerian economy and, by extension, the Nigerian people.

Consider: small businesses in the formal and informal economies are the largest employers of labour in Nigeria and other developing countries. Yet, less than five percent of the over 37m MSMEs in Nigeria which are responsible for over 50% of the country’s GDP has access to affordable loans to grow their businesses.

To make matters worse, available intervention funds are only a tiny drop in an ocean of need. While the financing gap for MSMEs is over one trillion naira, public and private funding sources are collectively just over N200 billion.

DBN is working hard to improve the situation. Armed with a hefty $1.3 billion war chest, the institution is set to achieve its plan to provide N5 billion to 20,000 MSMEs in its first full year of operation on a sustainable basis.

The process started with lending to three of the largest microfinance banks in the country in November 2017.

There have been many other important milestones within the period. To underscore the confidence of key investors have in the institution, the African Development Bank (AfDB) and the European Investment Bank (EIB) announced a joint equity investment of $70 million for lending to businesses across every sector of the Nigerian economy, especially agriculture.

A breakdown shows that $50 million dollars of the funds were contributed by AfDB while the rest came from EIB. The focus on agriculture is strategic because the sector is the source of the greatest number of jobs in the economy.

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But growing confidence in the institution is also reflected on the home front. DBN has also obtained the approval of the Central Bank of Nigeria (CBN) to set up a credit guaranty scheme through a wholly owned subsidiary.

This mechanism will help DBN establish a risk-sharing module that would define its transactions with partner financial institutions.

In August this year, DBN also signed a partnership with LAPO Microfinance Bank to build capacity and create jobs through 10,000 MSMEs under the bank. As Managing Director of LAPO, Mr. Godwin Ehigiamusoe explained at the event, a major focus of the partnership is also poverty alleviation.

The latest information from the DBN website also shows an expanding number of participating financial institutions which have signed on which include seven commercial banks and 12 microfinance banks.

No doubt DBN has come into the development finance space with serious intentions, passion, and a rigorous and professional approach.

As Okpanachi said in a recent interview, “DBN management is taking this phenomenal responsibility very seriously and we are determined to ensure that serious entrepreneurs get the support they need to grow so that the positive impact is felt in their businesses and the economy as a whole.”

Like other aspects of the institution’s activities, the latest ad campaign effectively communicates this passion.

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