FURNITURE PRODUCT PROGRAMME

PURPO

BACKGROUND The furniture industry is basically a catalogue of all the companies and activities involved in the design, manufacture, distribution and sales of furniture.

Furniture manufacturing today is largely based on the availability of man-made materials such as, plywood, laminated board, chipboard and hardboard as distinct from natural solid wood which has always been regarded as the traditional material for furniture making. Solid wood furniture manufacturers have retained important niche market segments primarily for high-end, expensive and design-led products. These specialized products tend to be purchased locally while mass-produced, large-volume products are sold locally and for export.

The critical success factor in the furniture industry is the availability of good quality, well treated wood. Most of the sawmills in the country are located swamp forests of Lagos and Rivers States which are fed with wood from the adjoining states by rafting or water transportation; and in the rain forest zones of Edo, Delta, Ondo, Ogun, Oyo, Osun and Cross River States. Some sawmills also exist In the savannah zone of Taraba, Adamawa, Benue, Kwara, Kogi, Kaduna, and Niger States.

Wooden furniture parts and components are now being manufactured and exported by a few large companies in Nigeria. Wooden furniture represents the major market for wood products in Nigeria.

 

RATIONALE

1.    It’s an area of comparative advantage with Nigeria occupying the tenth and third positions in the world and Africa respectively among Timber Producing Countries.

 

2.    As a sub-category of carpentry, the furniture industry is a major catalyst of economic growth. The Wood and Wood Product sector contributed about 0.22% (N179.6 billion) of the Manufacturing Sector Share of 6.83% (N5.4 trillion) to Nigeria’s Re-based GDP in 2013, with a predictable annual growth rate of 5.2%.

 

3.    With predominance of raw materials, rural to urban migration, improved living standard and demand for better housing with bespoke finishing in the urban centres; the furniture sector is proving to be a gold mine of sort in the country and attracting a good number of semi-skilled and professional furniture makers.

 

4.     This Product will provide the needed financing required to grow the furniture industry and create widespread impact in the Wood and Wood Product sector of Nigeria’s economy.

 

5.    This product will provide furniture makers the needed financial assistance to acquire modern equipment for improved output that can compete globally as well as create more jobs.

SOURCE OF EQUIPMENT The basic tools for furniture making consist of coping saw, smoothing plane, combination square, bevel gauge, marking knife, dovetail saw, card scraper, marking gauge, spoke shave, shoulder plane, block plane, chisel set, etc. However, while these tools can easily be sourced in the various Building Materials Markets locally, the modern automated machines and equipment, for mass- and specialized production, are imported from Germany, Italy, United States of America, Britain, India, China, etc. (in order of quality). The top three (3) furniture making machine producers in the world are:

 

Homage Group AG: Homagstrasse 3-5, 72296 Schopfloch,                                             Germany.  email: www.homag-group.com

Local Agent: Solamith Nig. Ltd., Citec Estate,

Abuja.

 

IMA Klessmann GmbH: Industriestr. 3, 32312 Lübbecke,                                                               Germany.

email: contact@ima.de

 

SCM Group:       Via Emilia 77, 47921 Rimini (RN), Italy

                     email: scmgroup@scmgroup.com

Local Agent: Douily for Wood Int’l, Idu Industrial Layout, Abuja.

TARGET MARKET/ CRITERIA The product will be available to existing and new Limited Liability Companies and Enterprises engaged in furniture making.
PROJECTED IMPACT A typical small- to medium scale furniture factory will create an average of 10 – 20 direct jobs and 50 – 100 indirect jobs, totalling 60 – 120 jobs.

 

Small Medium
Direct 5 -10 20
Indirect 25 – 50 100
Total 30 – 60 120
PROGRAM LIMIT N1.0 billion
SINGLE OBLIGOR LIMIT
S/N Category Single Obligor Limit
1. Small Up to N20.0m
2. Medium N20.0m – N50.0m
 

PRICING

Interest Rate: 9 % per annum.

Fees: 1 % processing fee.

TENOR 31/2 – 5 years commencing at the end of the moratorium period
MORATORIUM 6 – 12 months
SECURITY
Loan Amount (N’m) Security Arrangement
5.0 – 10.0 1.    Specific charge over the equipment financed.

2.    Irrevocable Personal Guarantee of the Chief Promoter of the company.

3.    Two (2) external guarantors acceptable to BOI who must belong to any of the following categories:

  1. Senior Civil Servant (Level 12 and above).
  2. Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer.
  3. Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc.
  4. Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers).
  5. The guarantees must be supported with a Notarized Statement of Net worth acceptable to BOI.
>10.0 ≤ 20.0 1.    All assets debenture.

2.    Irrevocable Personal Guarantee of the Chief Promoter of the company.

3.    One (1) external guarantor acceptable to BOI who must belong to any of the following categories:

  1. Senior Civil Servant (Level 12 and above).

b.   Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer.

c.    Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc.

d.   Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers)

The guarantees must be supported with a Notarized Statement of Net worth acceptable to BOI.

Or

4.    Bank Guarantee from Commercial Banks acceptable to BOI.

> 20.0 1.    All assets debenture.

2.    Legal mortgage on pledged property.

3.    Irrevocable Personal Guarantee of the Chief Promoter of the company.

Or

4.    Bank Guarantee from Commercial Banks acceptable to BOI.

FUNDING

STRUCTURE

Loan    –     90% maximum from BOI (including working capital

from BOI or the SME-friendly banks).

Equity – 10% (minimum) by the promoter

For an existing project, the estimated value of the factory building and/or relevant processing equipment, may be applied against the borrower’s 10% contribution. The factory building and/or equipment must be valued professionally by any of BOI’s accredited valuers.

DISBURSEMENT Term Loan:

In phases in accordance with agreed milestones and shall be backed by provision of performance bond by the accredited equipment suppliers (where the suppliers demand for advance payment before delivery of the equipment).

Working Capital:

After successful installation and testing of the equipment, payment shall be made directly to raw materials suppliers.

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