January 19, (THEWILL) – Baring all odds, the drive by the Development Bank of Nigeria (DBB) to grow the micro, small and medium enterprises (MSMEs), will assume an accelerated dimension in 2025. This anticipation hinges on the prospects of the Tax Reform Bills to lessen the tax burden on the MSMEs, while the upbeat in fintech penetration will boost productivity in the sector. These factors will enhance the strategies by DBN towards advancing its cause of the MSMEs.
Pleasant upbeat
The DBN has remained committed to its mandate of developing the MSMEs through the provision of financing and professional advisory services in line with strategic economic directions of the country. Harnessing the opportunities in the Tax Reforms initiative and fintech penetration, therefore, will count to the benefits of the small businesses through the execution of the DBN programmes in 2025.
According to a finance and tax expert, Abayomi Fashina, the focus on alleviating the tax burden for vulnerable groups is a crucial step towards achieving the objectives of the Tax Reform Bills.
For instance, the Bill exempts small businesses with annual turnovers below N50 million from corporate income tax and withholding taxes. It also harmonised the countless taxes that plague the small businesses from multiple sides.
More highlights
Other highlights include exempting low-income earners like the MSME operators from Pay As You Earn (PAYE) taxes, unlike the extant policy whereby PAYE applies to all categories of employees.
Again, reducing PAYE rates for individuals earning up to ₦1.7 million monthly, and maintaining zero percent Value Added Tax (VAT) on essential goods such as food, healthcare, and education will provide much-needed relief to low-income households that populate the MSMEs.
“These provisions are not just equitable – they are economically prudent. By reducing regressive taxation, the reforms can stimulate demand, support entrepreneurship, and encourage informal businesses to transition into the formal economy,” Abayomi said.
The finance expert added that the transition the Tax Reform Bills offer is vital in reviving the economy, as Nigeria’s informal sector contributes over 50 percent to GDP yet remains largely untapped for tax purposes.
The heartbeat
Industry experts stress that prioritising MSMEs’ financing hinges mostly on the fact that they collectively constitute the largest employers in many low-income countries including Nigeria, and this is a strategic focus of the government in the 2025 budget proposal.
In Nigeria, there are over 37 million MSMEs contributing to over 50 percent of the country’s GDP. However, less than 5 percent of these businesses have access to credit in the financial system – a factor that necessitated the creation of DBN to provide a sustainable lifeline to the sector.
Worthy action steps
The development finance institution has maintained an upward trajectory in its sourcing of loanable funds to the MSME operators. Among such cases was the €25 million secured from KFW Development Bank of Germany in November 2023 to support the nation’s MSMEs and boost the renewable energy sectors towards revitalizing Nigeria’s economy.
Speaking on the deal, Tony Okpanachi, the Managing Director/CEO of DBN, hailed KFW’s consistent support for Nigeria’s economy across various sectors; he emphasised KFW’s keen interest in witnessing the resurgence of Nigeria’s MSMEs and the energy sector.
“We’ve just concluded an agreement for a credit line of €25m provided by KFW to DBN for MSME financing. As a wholesale Development Finance Institution (DFI), DBN is geared to provide credit access to MSMEs through wholesale lending to financial institutions and microfinance banks,” Okpanachi had explained.
Highlighting DBN’s ongoing focus on green and renewable energy initiatives, Okpanachi mentioned the bank’s collaboration with 65 financial institutions specifically to support small businesses involved in these sectors.
Enhanced measures
Also, in 2024, DBN empowered over 4,000 MSMEs across the country through a combination of digital and physical training initiatives. Building on the success of the scheme, the bank announced the official launch of the 2024 DBN Entrepreneurship Training Programme (DBNETP) — their flagship annual programme designed to equip MSMEs with the tools they need to thrive.
Last year’s marked the 6th cycle of the DBNETP, as a core element of the DBN’s commitment to supporting the growth of Nigeria’s entrepreneurial ecosystem.
“This is the time to appreciate the role of DBN in the economic development of this country. The bank should step up its intervention role at this troubling time to salvage the small businesses battling for survival. This is the most trying time for the MSMEs,” Kennedy Agim, an agro-allied industrialist had told THEWILL.
Agim urged the government to extend the necessary support to DBN to ensure it played its role of resuscitating the MSMEs being carried away by the terrific flood of economic challenges.
We’re in charge
“We monitor the utilisation of funds by partnering financial institutions and, more importantly, its impact on their businesses. Our focus extends beyond disbursing funds; we remain actively engaged throughout the process to ensure a tangible impact on both the beneficiaries and the economy,” Dr Okpanachi had said.
The fintech dimension
The boost in digital transactions offered by the fintech companies is expanding commercial activities in the countryside. THEWILL findings revealed that the last festive season witnessed unusual business boom in the rural areas facilitated by e-transactions.
For the first time in many years, the rural areas witnessed idle bank ATM terminals, yet business boomed via digital payment transactions – transfers and POS services – at a level never experienced in the past.
Petrol filling stations, transporters like the bus, motor-cycle and tricycle operators, petty traders, market women who sell soup ingredients embraced digital payments.
“Business has never been this good, despite the high cost of things,” a middle-aged woman who identified herself as Beathrice Akor, told THEWILL where she runs a bar and restaurant in a remote village in Imo state.
Roadside mechanics, vulcanizers and car wash operators accepted e-payment through transfer or POS, so did the worship centres. This is good news for DBN which is eager to put the Nigerian MSME sector on a global scale.
Last year, DBN empowered over 4,000 MSMEs across the country through a combination of digital and physical training initiatives. Building on the success of the scheme, the bank announced the official launch of the 2024 DBN Entrepreneurship Training Programme (DBNETP) — their flagship annual programme designed to equip MSMEs with the tools they need to thrive.
This year will see the success story.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
