Shock Value

Shock Value

The Nigerian economy, like any other, experiences “shocks”— events or policy decisions that can send a ripple of changes through the system. This column zooms in on these ripples in a range of sectors to explore how and why these shocks matter.

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Banking on MSMEs

Ebehi Iyoha

Ebehi Iyoha

Ebehi is an avid reader seeking insights in unexpected places. Her research interests include economic development, political economy and trade.

During election season, everything an incumbent does seems politically motivated. So, when Goodluck Jonathan inaugurated the Development Bank of Nigeria (DBN) five days before the March 28 presidential elections, it was easy to write the news off as little more than a gambit to garner more votes. Perhaps the timing of the announcement was a deliberate effort to complete something that was already in the works, in case the elections didn't go in Goodluck's favour, with a boost in the polls as a possible bonus, or perhaps it was merely incidental as all the preparations just happened to fall into place at that point. Nevertheless, the motivation behind the establishment of a new national development finance institution (DFI) is secondary to the larger question on people’s minds: what can DBN bring to the table?

A Bank of Industry duplicate?

Does Nigeria really need another federal government-owned development bank? Of Nigeria’s five national DFIs already in existence — Bank of Agriculture (BOA), Bank of Industry (BOI), Federal Mortgage Bank of Nigeria, Nigeria Export Import Bank (NEXIM), and the Infrastructure Bank, DBN appears to have the most in common with BOI. They both aim to provide low interest, medium to long-term financing for the industrial sector and micro, small and medium scale enterprises (MSMEs). In fact, when the news of DBN’s impending establishment came out, there were expectations that BOI and BOA would be dissolved or subsumed into the new bank.

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