Technical Assistance for the Establishment and Operationalization of Development Bank of Nigeria’s Credit Guarantee Facility (1)

Area of Operation: Nigeria

Duration of Assignment: June 2018 – August 2019

Name of Client: The World Bank Group

Project Description:

The World Bank-funded USD 500m Development Finance Project supported the establishment of the Development Bank of Nigeria (DBN), a wholesale development finance institution licensed and supervised by the Central Bank of Nigeria, with the objective of addressing the access to finance gaps of underserved micro, small and medium enterprises (MSME) in Nigeria. The DBN initiated provision of lending operations and planned to establish a Credit Guarantee Facility (CGF).

The clients sought dedicated technical assistance due to the given the technical complexity of designing and operating a CGF, including tasks related to product design, testing and roll out.

Our Services:

• Conducted market sounding among prospective participating financial institutions and advised on the design parameters of the CGF, including the financial modelling of the facility.
• Advisory support to the DBN on the establishment of the CGF subsidiary (named IMPACT Credit Guarantee Limited), as well as matters related to initial staffing level and profiles, and required processes and systems.
• Set up eligibility criteria and procedures for selection and appraisal of participating banks and monitored their compliance.
• Identified required MIS applications and set up monitoring and evaluation systems.
• Development of a comprehensive CGF manual governing CGF operations, including detailed design of the terms and condition of the guarantee.
• Preparatory activities for the pilot roll-out phase that included: financial model development, guarantee framework agreements (GFAs) development, negotiations with PFIs, training of IMPACT staff, preparation of materials for PFI trainings, review of DBN’s manuals and preparation of communications strategy.