10bn Capital Base for Development Finance Institutions- CBN

In its bid to strengthen financial institutions in the country, the Central Bank of Nigeria (CBN) has released operational guidelines for development finance institutions (DFIs) stipulating a minimum capital of N10 billion minimum capital for Wholesale Development Financial Institutions (WDFI) N5 billion for Retail (RDFIs).

According to the Exposure Draft Regulatory and Supervisory Guidelines for Development
Finance Institutions in Nigeria released by the apex bank on its website (See Here) . The CBN further stipulated a N250, 000 and N100, 000 application fees as well as N1 million and N500,000 licensing fees for WDFIs and RDFIs respectively.

DFIs are specialized financial institutions established with specific mandate to develop and promote key sectors of the economy considered to be of strategic importance to the overall socio-economic development objectives of the country.

As part of efforts to accelerate the pace of development in the economy, government has over the years established development finance institutions (DFIs) to provide financial interventions in the identified sectors, targeting micro, small and medium-sized enterprises (MSMEs), to complement the efforts of banks and other financial institutions (OFIs).

The CBN also said that as a result of limited access to long-term and low-interest funds, in addition to other factors, the DFIs have recorded limited successes, hence, “the federal government in collaboration with development partners and international financial institutions (IFIs) decided to sponsor the establishment of a Wholesale DFI (WDFI) to bridge the gap and to increase the availability and access to finance, in particular, for MSMEs.” The benefits of WDFIs are documented and acknowledged in both developed and emerging markets.

Ajibola Aderonke is an auditor at professional services firm Ernst & Young (EY). She previously worked another Big 4 accounting firm PwC. She can be reached at ajibolaaderonke@gmail.com for ideas and suggestions. The post above and its ensuing comments, if any, is purely the opinion of the writer.