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FG targets $10bn capitalisation for development bank

By BusinessNews Staff on October 7, 2014

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said the Federal Government is targeting capital base of $10bn for the proposed Wholesale Development Bank of Nigeria.

Okonjo-Iweala, who said this in an interview with Bloomberg TV Africa on Saturday, said the bank would start off with about $2bn, with financial support from the World Bank and Africa Development Bank, among others.

She said the bank was a product of public-private partnership, which was supported by the government but registered and run by the private sector.

Okonjo-Iweala said, “It is very difficult for business people, especially small and medium enterprises to find any money for five to seven years; at most, they can borrow for a year to three years.

“If you want to build a business sustainably and you want your economy to have sustained growth, you have got to fix access to finance, not just for running the company but also for longer-term investment.

“That is why we are building the Development Bank of Nigeria. And the ultimate drive, or dream, or vision is to capitalise it up to $10bn, but we are going to start with about $2bn and we will go up to $5bn. The institution is going to get strong and get rated, and it will be able to float its own money and have very strong capitalisation.”

Expressing excitement about the prospects of the institution, the minister said the government was getting much help from the World Bank, AfDB, KfW of Germany, BNDES of Brazil, and the Development Bank of South Africa.

“The money comes from four sources, the government, the World Bank (that is putting in $500m), the African Development Bank (which is contributing $500m and which has actually taken an equity stake in the institution, which is unusual), and the KFW of Germany,” Okonjo-Iweala further said.

The minister added, “This is not going to be like the old development banks we had that didn’t work. We have registered this and I want to really commend President Goodluck Jonathan. He supported an unusual move, which is to register this as a private sector institution.

“So, it is a public-private partnership of sorts. It is government-supported, but private sector -registered and run. And it will run on principles that will make sure governance will be very strong.”

Citing the fact that the Nigerian Sovereign Wealth Fund had been rated the second most transparent in the world by the Sovereign Rating Institute, Okonjo-Iweala added, “So, we are going to do the same process for the bank. We will advertise and we will get the best person to run the institution.”

Meanwhile, the Federal Government has urged the European Union to invest in the proposed Wholesale Development Bank through the union’s development financing outfit, the European Development Bank.

A statement by the Finance ministry on Sunday quoted the Minister of State for Finance, Ambassador Bashir Yuguda, to have made the plea while receiving a delegation of the union led by the EU Ambassador to Nigeria, Michel Arrion.

Yuguda also said the proposed bank had raised significant interest among global funding agencies like the World Bank, which had pledged $500m, other development oriented financial institutions like the AfDB.

[Punch]

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