Development Bank of Nigeria Targets N1.8tn Loan Portfolio as it Reboots Strategy to Empower MSMEs

While the Nigeria economy continues to rely strongly in its informal sector for resilience and recovery, the Nigeria Development Bank (DBN) reveals an ambitious plan to inject a renewed life in micro, small and medium -sized businesses (MSME), the often raised engine of job creation and economic development.

The bank aims to increase its current loan portfolio to more than 1.8 Billion de Nairas over the next five years. It also plans to mobilize n3 billions of fresh capital, a mixture of debts and equity, to deepen access to the finance of MPMs, many of which remain non-banished or sub-subcademy due to structural bottlenecks in the Nigeria financial system.

Speaking in Lagos, DBN’s director general, Tony Okpanachi, described the new five -year strategic plan as an increase in what the institution has achieved since its creation, with a more aggressive posture on financial inclusion, gender equity and sustainability.

“We want to develop what we have done in the first five years. There is still a lot to do in Nigeria, and we are very ambitious in our approach,” said Okpanachi.

Women, young people and disadvantaged groups at the center

While DBN works as a wholesale development financing institution, channeling funds thanks to 79 participating financial institutions rather than dealing directly with sole proprietorships, its new strategy places inclusive growth at the heart of its operations. The bank aims to allocate 20% of its portfolio of loans to companies led by women, while 40% will go to companies belonging to economically disadvantaged Nigerians.

It is a notable pivot in a country where companies led by women are often excluded from formal credit channels despite a significant part of the informal economy. Likewise, many companies in the Northern and Rural Regions of Nigeria have historically had trouble accessing capital due to insecurity, mediocre infrastructure and financial illiteracy.

“We are targeting sectors such as manufacturing and agriculture-areas that are with a high intensity of labor and have the potential to absorb large segments of the workforce,” added Okpanachi.

An emphasis on green financing and regional inclusion

In accordance with the objectives of the global climate and the Nigeria energy transition plan, DBN also lies with its strategy towards green funding. The bank intends to support companies with sustainable environmental operations, in particular those of underdeveloped states.

It is not a relaxed wink with climatic targets. Green finance quickly emerges as a critical component of sustainable development financing, and Nigerian institutions are under pressure to align their portfolios with resilient investment standards in the climate. DBN seems eager to set up this wave.

The director general revealed that the bank was aimed at creating two million jobs, both directly and indirectly, over the next five years, which claims to be double the 1.2 million jobs which he claims to have activated between 2017 and 2022.

One of the separate characteristics of the bank is that it does not lend directly to the MPME. Instead, it works through commercial banks, microfinance banks and other financial institutions that meet its rigorous credit and impact criteria. This model allows it to multiply its scope while strengthening the wider financial ecosystem.

In a country with more than 40 million MPMs, according to Smedan, this model of wholesale loans has helped to fill the risk perception gap which prevents many banks from lending small businesses.

“Strategically, we are working on three fronts: explaining our sources of funding, deepening current partnerships and taking advantage of existing resources to attract new ones,” said Okpanachi.

To achieve its objective of collecting funds of 3 Billions of N, DBN is currently in talks with international development partners and explores the markets of local capital, including the plans of an interior bond issue, subject to stable macroeconomic conditions. This step, if carried out, would signal a stronger change towards self -sufficiency and long -term viability.

Despite the current opposite winds of Nigeria, marked by high inflation, volatile exchange rates and record debt debt bonds, the DBN capital statement ambitions reflect growing confidence among development financing institutions to navigate turbulence by mixed financing models and public-private partnerships.

An impact record, but challenges remain

DBN recently revealed that he had spent more than 1 Billion de Nairas from MPME loans through participating institutions. He noted that 74% of its beneficiaries were women, and 25% were young people – a remarkable demographic inclination which is rarely carried out in traditional commercial loans.

It is also striking that its awareness of states affected by conflicts and economically excluded such as Borno, Yobe, Katsina, Zamfara and Adamawa, where small businesses are faced not only with financial exclusion, but threats of insurrection and insecurity.

In terms of capacity building, the bank said it formed more than 9,500 MPME through Nigeria – an often overlooked component of development financing, because many small owners of small businesses in the country do not have the financial literacy necessary to evolve or formalize operations.

However, the DBN model has been criticized by certain stakeholders, who noted that because DBN does not lend directly, the planned impact can be diluted if partner banks maintain high interest rates or impose unfavorable conditions. Others called on the bank to work more closely with informal cooperative groups and fintechs to deepen its scope.