The President of the African Development Bank (AfDB), Akinwumi Adesina, has called for improvement in the capitalisation of development banks in Nigeria to enable them provide funds at affordable interest rates.
Adesina stated this while delivering a keynote address at the BusinessDay CEO Forum in Lagos on Thursday.
He said, “The Bank of Industry, Nigerian Import and Export Bank, and Bank of Agriculture, should be significantly capitalised to provide loans at affordable interest rates to manufacturers, especially for small and medium-sized enterprises. The deepening of the domestic capital markets will further allow companies to access the equity financing they need to grow their businesses.
“By assuring financing to large, medium and small businesses, Nigeria will ensure integration of its supply chains for regional and global markets. The African Development Bank has so far provided about $1.6bn in low-interest rate lines of credit to 15 financial institutions in Nigeria in the last decade.”
The AfDB president cited a report by PWC Nigeria which estimated that medium, small, and micro-enterprises accounted for 50 per cent of Nigeria’s Gross Domestic Product, but received only one per cent of the total credit from financial institutions. He said the company estimated the financing gap for MSMEs to be N617bn.
Adesina pointed out that while interest rates were negative in Japan (-0.1 per cent), 3.9 per cent in the USA, 0.25 per cent in China, and four per cent in India, manufacturers in Nigeria faced extremely high interest rates at over 15 per cent.
Speaking further at the event, Adesina disclosed that the AfDB and the Nigerian government were working together to launch Special Agro-industrial Processing Zones across the country.
“We are working closely with Federal Government, seven state governments, the Federal Capital Territory, the Ministries of Finance, Agriculture, Trade, Industry and Investment, Water Resources, and the Nigerian Sovereign Investment Authority on the design of these Special Agro-industrial Processing Zones.
“They are expected to create at least 1.5 million jobs. The African Development Bank and its partners have already mobilised $520m towards the first phase of these Special Agro-Industrial Processing Zones in Nigeria,” he added.