Managing Director of the Development Bank of Nigeria, Tony Okpanachi, says expanding finance for micro, small and medium-sized enterprises could unlock millions of quality jobs. Speaking at the IMF/World Bank Annual Meetings in Bangkok, Thailand, he discusses investment, access to finance, global development models and partnerships. Nume Ekeghe presents excerpts
What have been the major outcomes of your engagements at the IMF/World Bank Annual Meetings, particularly for the Development Bank of Nigeria?
L
et me start by saying the theme of the Annual Meetings is quite apt, given the fact that the issue of job creation is quite important, especially for developing countries and Nigeria in particular. There have been a lot of issues around unemployment, the youthful population, the entrepreneurial population, and the need to be able to get great jobs, not only jobs, but decent jobs. The second thing, which is quite important here, is the opportunity Nigeria had to showcase the reforms and the changes in Nigeria. Expectations are looking up in Nigeria. We had this investors’ forum where the Minister of Finance and Coordinating Minister of the Economy and the Central Bank Governor were also present to share with the Western community what Nigeria is doing and the results of the reforms. We can see that even globally, the World Bank and the IMF are acknowledging that Nigeria is on the right track. So, i must say it was a very important opportunity to showcase Nigeria.
Now, coming down to the Development Bank of Nigeria, we had several sessions and a lot of bilateral discussions with our funding partners. We are also exploring new funding partners and other partners for technical assistance. Some of our conversations with existing partners indicate that they are willing to do more with us, and they are quite happy with what the Development Bank of Nigeria has done in this period. Of course, they are also looking at what we plan to do in terms of our future outlook, and they are quite positive about that. Secondly, there is the opportunity to get other partners to work with us and with MSMEs in Nigeria, ultimately providing not only access to finance for micro, small and medium-sized enterprises, but also technical skills where necessary and capacity building. Some have even said they will provide access to markets for small businesses in Nigeria. We are exploring different areas and having discussions with different partners to see how we can work with them to bring more impact to Nigeria. Beyond the Development Bank of Nigeria itself, the meetings also provide an opportunity to share ideas with other participants. The Annual Meetings was well attended globally, with participants from over 190 countries, I am told. So, it is a good opportunity to network, learn from others and share best practices globally.
The theme of the meetings places significant emphasis on job creation. How many jobs has DBN facilitated since its establishment, and how does the bank measure the quality of those jobs?
We have created about 1.2 million jobs since DBN was created, and it is an ongoing thing. The more you provide access to finance to micro, small and medium-sized enterprises, the more they create jobs through their activities. The impact comes through job creation. Now, it is not only job creation; we are also trying to look at decent job creation, the quality of the jobs. So, it is not just jobs, but the quality of the jobs.
Working through the financial institutions that we partner with, we do monitoring and evaluation to ensure that we see that the impact of this lending to them is translating into job creation and all the other impacts that we expect.
Beyond access to finance, what are the major structural constraints limiting Nigeria’s ability to create more decent jobs, and what needs to change to address them?
Access to finance is just one of the issues. There are so many other issues. First and foremost, the macroeconomic environment was quite challenging. With the reforms, it has been possible to avert what would have been a catastrophe, which is very positive. So now, what we are seeing is the need to begin to translate some of those reforms into impacts on ordinary citizens by way of shared prosperity and creating opportunities for people to be able to create jobs. That is an overarching point. Secondly, specifically coming to job creation, once the economy picks up and economic activities pick up, all the macroeconomic indicators begin to moderate positively. Of course, businesses will then operate in an environment where they are able to expand, bring in new products and create new opportunities to generate jobs that are not only relevant but also decent. Secondly, as we see opportunities arise, technology provides opportunities in Nigeria. For example, technology and artificial intelligence are opportunities that will create jobs for people. Thirdly, there is the operating environment for manufacturing, small-scale industries and all those things. Once you deal with issues around power and infrastructure, which are taking the forefront now, you will see businesses operating in an environment where they can create the kinds of jobs we are talking about. Then, fourthly, when you look at the entrepreneurial spirit of Nigerians themselves, they have the ideas and they want to do it, but you have to create a normal environment for them to do it. We are beginning to see that happen in different areas. Once opportunities come in technology, innovation and other areas, these are things that create decent jobs for people.
So, beyond government itself, the private sector should have an enabling environment to excel and create these kinds of jobs. We expect that to happen. Beyond that, it is also a value-chain issue. When you look along the value chain in different sectors, you see opportunities. For example, in the agricultural sector, moving from a focus on primary products to creating value within the value chain will create jobs.
What we are looking at and encouraging is that we should create jobs, but create decent jobs that will make the right impact.
At the investors’ forum here in Thailand, the Nigerian delegation outlined investment opportunities worth $78.5 billion and presented a framework for attracting international investors. How can these investments translate into jobs and opportunities for MSMEs, and what is your assessment of the government’s approach?
First, let me say I must commend the approach this time around because it was very serious and business-minded to come out with a deal room. You come to the deal room with specific deals and projects that are calling for investors. So, you have done your homework. You come here and say you are showcasing those deals, that Nigeria is open for business and open for investment. You say these are the deals; come and discuss them. The counterparties are also identified. I must commend that approach. It is very important. Secondly, the specificity of the deals is also very apt because they are specific about the deals, the locations and the sectors. So that has also helped. Now, to answer your question directly on when these deals are to be consummated. These appear to be big-ticket deals. I would call them infrastructure deals, but there is a value chain, and they create jobs across the value chain.
Take any deal, for example. Take the floating LNG project, which is part of the deals on the table. Of course, it is going to create decent jobs for people who are going to work there in different parts of the project.
When you look at some of the deals that have to do with agriculture, value addition and all that, these things create jobs. As they are consummated, they obviously create opportunities for others within the value chain to create millions and millions of jobs, and I always say decent jobs, as they should be. So, it is a booster, and what I would encourage investors to do is to take Nigeria seriously and look at those opportunities. You see, it is in the midst of a crisis and challenges that you also get opportunities to enable you to make a mark. Investors are looking for opportunities, and the opportunities are there. With the kind of stability we are seeing now and Nigeria’s growth trajectory and growth projections, I think it is the right time for them to come and see how they can partner with local partners and invest appropriately.
What are the key takeaways from these meetings for DBN, particularly in terms of expanding financing options, reducing borrowing costs and bringing global best practices to Nigerian MSMEs?
For DBN, I must say that these meetings provide an opportunity, first and foremost, to draw attention to small MSMEs in Nigeria. In some of the sessions we have attended, you see that they talk about this. We are talking about big projects, but it all translates because micro, small and medium-sized enterprises create the greatest number of jobs. So that focus is quite important. Secondly, for DBN, ultimately through our partnering financial institutions, how do we translate some of these global best practices to our country? Thirdly, if there is a need for additional funding sources, because there are issues around the cost of funding and the cost of borrowing, are there additional sources? Are there concessionary sources of funding that can help ameliorate the cost of borrowing for small businesses in Nigeria? Of course, we are exploring that as part of the discussions we are having. Beyond that, we are not looking at lending alone or access to finance. What are the other best practices that we can also bring to bear by sharing experiences with other developing countries? We had some bilateral discussions with Indian companies that want to share with us what they are doing. How do we share that in Nigeria? Even here in Thailand, we see a vibrant economy. How are the small businesses doing? How are they surviving? We had some conversations with small businesses to see how things are different here, what the challenges are and how they are able to overcome those challenges. How can we also share those experiences with our businesses back in Nigeria?
Those are the things we take away from here, and, of course, they will guide and help us as we bring some of these best practices to bear in what we do with our MSMEs in Nigeria.