FURNITURE PRODUCT PROGRAMME

PURPOSE/ RATIONALE ·         This is an area of comparative advantage as Nigeria occupies the tenth and third positions in the world and Africa respectively among Timber Producing Countries.

 

·         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%.

 

·         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.

 

·          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.

 

·         In 2014, the sector accounted for 2,395 formal jobs in Nigeria. 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.

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
COLLATERAL/ SUPPORT
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:

a)        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)

e)        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:

a)        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

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

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 and payment shall be made directly to raw materials suppliers.
REPAYMENT SOURCE
  • From proceeds of the company’s operation
REPAYMENT MODE
  • Monthly payment of interest and repayment of principal.
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