The Central Bank of Nigeria (CBN) has said it is considering the recapitalisation and restructuring of development finance institutions (DFIs) to bridge funding gap facing micro, small, and medium-sized enterprises (MSMEs).
Deputy governor for economic policy at the CBN, Muhammad Abdullahi, made this known during a panel discussion at the launch of the Nigeria Development Update by the World Bank in Abuja.
According to him, across all the DFIs in Nigeria, the total asset base is slightly above N8 trillion, whereas what is required in development finance for MSMEs is over N130 trillion.
Abdullahi said injecting capital would not solve the problem, adding that the only way is making them bankable and investable.
He stated that the CBN and ministry of finance are reviewing DFI structures to improve their efficiency and risk appetite and “ensure that we can correct the incentives, improve risk appetite, and also strengthen capital levels.”
He also said the reforms aim to introduce stronger market-based principles.
On the persistent financing challenge for MSMEs, he said lending to the real sector has always been one of the structural challenges
Abdullahi added that with the mix of commercial banks with stronger capital bases and DFIs undergoing structural reforms, “we expect significantly more credit to flow to businesses”.
The development finance institutions in Nigeria are Development Finance Institutions Bank of Agriculture (BOA), Bank of Industry, Development Bank of Nigeria, Federal Mortgage Bank Of Nigeria, National Credit Guarantee Company Limited, Nigeria Export Import Bank, Nigerian Consumer Credit Corporation, and The Infrastructure Bank.
