Diamond Bank in Nigeria complements
SME Finance with Training
Nigeria’s Diamond Bank—one of the country’s strong, mid-sized institutions—is a friend to SMEs. Alex Otti, the bank’s CEO, has repeatedly shared his believe that Nigeria’s economic growth depends on a strong national cohort of small-and-medium enterprises, and that his bank has a responsibility to support the sector. Since 2009 he has been making good on those statements by investing in the branch processes and IT systems needed to develop capacity to lend to small-and-medium enterprises at scale. Helped by a loan from the IFC, as well as technical support from IFC consultants, Diamond Bank developed two loan products, as well as an automated system to evaluate an applicant’s risk and approve or deny an application within one to three days. Diamond also trained its branch lending personnel in the loan products and in basic credit. These actions increased Diamond Bank’s SME lending portfolio to more than $30 million by 2011, with less than one percent of those loans overdue, according to an article by the IFC consultant on the project. To supplement its lending in the sector, Diamond Bank also runs the Building Entrepreneurs Today program, a joint initiative with the Pan-African University in Lagos that offers classroom training to small businesses with high potential for growth. At the end of the classroom session, the 50 participating small businesses in each cohort compete for the top three spots—winners receive growth capital equivalent to about $18,000 USD.