Category: Business

The Bank of Industry (BoI) has partnered Grow Africa Equity Partners Limited to raise a $60 million Venture Capital Fund for small businesses, as part of its innovative financing scheme and efforts to expand intervention in the industrial sector from loan disbursements. Under the arrangement, the bank has made an investment commitment of $6 million to aid provision of equity capital for fast growing businesses.

Indeed, the Venture Capital Fund aims to provide equity capital, along with strategic and operational support to early stage and fast growing businesses involved in technology, agriculture, consumer goods and services sectors. BoI’s Managing Director, Rasheed Olaoluwa in a statement at the weekend, said: “Nigerian businesses cannot be built on debt alone. It has long been part of the bank’s vision to find ways to provide sorely needed equity capital and business advice to promising Nigerian businesses. “Our partnership with Grow Africa is one of the avenues for realising this vision and we remain committed to the pursuit of our core mandate of providing long-term financial support to small, medium and large companies/projects in Nigeria’s key sectors.”

Olaoluwa added that the investment commitment was informed by the track record of Grow Africa’s partners, the developmental impact of their existing portfolio and their strong pipeline for potential new investments. The Chairman of Grow Africa Equity Partners, Adedotun Sulaiman, noted that with the right type of support, Nigerian businesses could become global leaders. Sulaiman, who also chairs the Boards of Interswitch, SecureID, IDEA, New Horizons and others, said: “Over the past 10 years, I have provided capital and advice that have helped several businesses grow from ideas into multi-billion naira industrial leaders. “Through this partnership, I hope to see many more entrepreneurs realise their dreams of creating leading companies and delivering massive value to Nigeria.”

The Managing Director of the company, Afam Edozie, added: “We are extremely pleased with this partnership with BoI, and this is a strong signal of the bank’s commitment to supporting indigenous Fund Managers to catalyse growth and sustainable development in Nigeria. “This new investment will increase development impact and socio-economic benefits through the creation of additional jobs, development of local entrepreneurship and will create additional fiscal revenue to Government. “The Bank of Industry has demonstrated that they share our dedication and passion in helping to build world class industries in Nigeria”. The Bank of Industry is Nigeria’s leading industrial development financing company, with a loan portfolio of N592 billion to projects in Nigeria’s real sectors- agro-processing, solid minerals, gas and petrochemicals, as well as engineering and technology. Similarly, it supports SMEs through a network of 14 offices across Nigeria and 122 business development services providers.

Garment makers in Aba, the commercial hub of Abia State have appealed to the Bank of Industry (BOI) to ensure that industry operators’, especially those outside Lagos, benefit from the proposed “N1 billion Fashion Fund” targeted at small and medium enterprises.

The group on the aegis of the Association of Tailors and Fashion Designers (ATFAD), an umbrella body of tailors and fashion designers in Abia, observed that if well implemented that the fund, would boost activities in the sector, create jobs and increase the gross domestic product (GDP) of the country.

Onyebuchi Nwaigwe, president AFFAD, commended the BOI for initiating the programme, but expressed doubts over implementation, stressing that similar funds targeted at the MSMEs in the past, often does not get to them.

The  N1 billion Fashion Fund for players at the micro-, small- and medium-scale levels according to Rasheed Olaoluwa, managing director/chief executive officer, BOI,  is in fulfilment of the bank’s commitment to develop special funds and credit products to deepen penetration of and enhance support to specific SME clusters.

The BoI Chief Executive Officer, explained that many Nigerian fashion designers have received training in some of the best fashion schools in the world, and therefore have the intellect, talent, creativity, skills and drive to take Nigeria’s fashion industry to the next level on the global fashion stage.

He said the growth in Nigeria’s urban population, the macro-economic environment, increasing purchasing power of the emerging middle class and a strong appetite for consumer goods are positive factors in favour of a flourishing fashion cluster.

He explained that fashion provides an important opportunity to diversify Nigeria’s economy and create jobs, particularly among the youth, expressing confidence  that the Fund will help to catalyse the fashion cluster, create millions of jobs and also generate foreign exchange earnings for  businesses and economy.

He disclosed that the bank has identified 34 SME clusters nationwide through which it will drive its new SME financing paradigm.

“At the Bank of Industry, we have resolved to strategically approach the issue of SME financing using the cluster approach, which has been successfully implemented in many fast-growing economies in the world. India is a very good example, where hundreds of SME clusters have been identified and developed,” he explained.

He further revealed that in the months ahead, more funds and products would be designed and launched to support the various SME clusters already identified.

The Bank of Industry (BOI) has put the loan approval for the development of Micro, Small and Medium Enterprises (MSMEs) in Gombe State at N903.4 million, out of which 80 per cent will be specifically dedicated to Agro-processing. The Managing Director/ Chief Executive Officer of the bank, Rasheed Olaoluwa, who disclosed this during the commissioning of BOI’s new office in the state, said that so far, projects being financed through loans from the bank had created 1, 900 direct and indirect jobs in Gombe state. He said: “Shortly after my assumption of duties in May, 2011, the Governor of Gombe State expressed the desire for partnership with BOI as a vehicle for accelerating the socio-economic development of the state. In order to actualise the partnership, he made a pledge to contribute the sum of N500.00 million towards the establishment of a N1.0 billion Entrepreneurial Development Fund, which was to be matched in like sum by BOI’’.

“The first tranche of the state’s contribution to the matching fund in the sum of N250.0 million was released in August 2011. This amount was equally matched by BOI thereby creating an initial pool of N500.0 million for on-lending to entrepreneurs in the state. By this gesture, Gombe State emerged as the first in the North East geopolitical Zone to collaborate with the Bank of Industry in entrepreneurial development under the States’ Matching Fund Scheme. “I am pleased to inform you that to date, a total sum of N903.4 million was approved for 171 projects. However, because the available matching fund was N500.0 million, only 55 per cent of the approved loan amount could be funded under the matching fund scheme. It is evident that there is an urgent need for the state government to release its outstanding contribution of N250.0 million to the matching fund’’.

He added: “Notwithstanding, BOI had disbursed N110.0 million to 16 enterprises in the state from its own resources. In terms of impact, 1,277 direct and 623 indirect jobs totalling 1900 were created. Gombe State is a predominantly agrarian state and this is evidenced by the fact that, 80 per cent of the approved loans was committed to agro-processing, while 20 per cent was for other sectors like beverages, construction products, plastic and chemical products, among others. “The BOI boss noted that given the fact that Gombe State had been identified as a major hub for commodity-based industrial clusters within the North East, the bank would concentrate its lending efforts in major industrial clusters such as meat processing, metal fabrication rice milling and groundnut oil production, among others. According to him, in a bid to deepen its developmental impact in the country, BOI has identified 34 product clusters nationwide, adding that Gombe, being a major hub for clusters in the North East of Nigeria, will be a beneficiary of the initiative. Some of the identified clusters in the state, he said, include meat processing, metal fabrication rice milling, groundnut oil production, gum arabic ,dairy products ,cotton and its entire value chain ,gypsum ; limestone .

The Divisional Head, Large Enterprises, Bank of Industry, Mr. Joseph Babatunde, has said that more than 17 million small businesses in Nigeria are in the informal sector and not registered with the Corporate Affairs Commission. He added that the number constitutes 99.87 per cent of all small businesses in the country. Babatunde said this while presenting a paper during the 16th annual lecture of the Catholic Brothers United in Lagos recently.

Drawing from the 2012 data of Micro, Small and Medium Enterprises published by the National Bureau of Statistics, he said, “The number of MSMEs in the country, according to NBS, is 17,286,671. “Out of this number, there are approximately 17,261,753 or 99.87 per cent micro-enterprises, 21,264 or 0.12 per cent small enterprises, while approximately 1, 654 or 0.01 per cent are medium enterprises, “Micro enterprises form majority of the enterprises in the country, but they are all in the informal sector. “This could be a reflection of the possibility that certain economic conditions may have either forced small enterprises to go informal or that more unemployed persons are engaged in informal activities.”

While explaining the legal framework for the SME sector in a recent MSME forum, the State Coordinator, Small and Medium Enterprise Development Agency of Nigeria, Yinka Fisher, explained that businesses not registered with the CAC have no legal framework and therefore, lack protection under the law. He said, “Most MSMEs operate in the informal sector and are outside the official framework of regulation and support.”

“The reason why people can go to the market and buy things and not be able to sue the owners of the products when things go wrong is because most of the companies are not registered and so are not bound by the laws of the land. “But once an institution has been formally registered, you have power to sue and be sued. This will create a right for both customer and the business owner.”

The Chairman, Nigerian Association of Small and Medium Enterprises, Lagos Chapter, Ladi Jemi-Alade, told our correspondent that most MSMEs remained in the informal sector because their operators were trying to avoid payment of taxes. Jemi-Alade added that multiple taxation in the Nigerian business environment contributed to the large volume of unregistered businesses in the country. He said, “Taxation is one of the key challenges facing the sector.

“If you want to start a business now, by the time you go through all the processes, you will discover that you have spent almost all the capital you want to invest in the business on various taxes. “In Nigeria you have various forms of taxation. When you are going on the road, you are being stopped by the police and made to pay tax. “That is why over 17 million small businesses in the country are in the informal sector.

The Executive Director, Small & Medium Enterprise directorate of BOI, Mr. Waheed Olagunju, has disclosed that the Bank granted a loan of N823 billion to 4, 000 beneficia­ries in the last fourteen years. Disclosing this in Lagos, Olagunju said the loan created over 1.8 million jobs from 2001 to 2014. He, however, said that the bank was working vigorously towards ensuring that the Micro, Small and Medium En­terprises, MSMEs accounts for at least 30 percent of the bank’s risk assets by the year 2019 with a single digit ratio of no-performing loans to total loans.

According to him, increasing bank’s exposure to MSMEs would enable it achieve its double bottom lines of finan­cial viability and high developmental impacts. Olagunju said: “Since less than 10 percent of the loans went to MSMEs, we know that the developmental impacts and multiplier effects of our interven­tions such as job creation, would have been higher, if more financial assistance had gone to them’’

“Our strong resolve is to rapidly in­crease the volume of loans to MSMEs with very high viability prospects’’, he stated. According to him, there are internal and external constraints limiting BOI exposure to MSMEs sector to less than 5 percent of its portfolio over a 13 year period, noting despite some challenges of the sector, BOI identified potential viable projects and quality of entrepre­neurship, which also impacts on deal flow generation, mobilization of finan­cial and non-financial resources as well as operating environment.

‘Taking all these into consideration, we are continually doing a lot of think­ing outside the box and are evolving in­novative solutions and taking unprec­edented steps to de-risk MSMEs sector and make them more attractive to finan­cial institutions. Olagunju also identified rejection rate of loan applications from MSMEs as one the challenges facing the sector.

While putting application rejection rate at 90 percent, he urged loan appli­cants to go through any of the 122 Busi­ness Development Service Providers, BDSP, saying they are engaged with the MSMEs in various local government ar­eas in the state. ‘’They are people closer to prospective customers, who will help them package the proposals so that by the time they get to BOI, they have what we call a bank­able proposal’’, he added

In fulfilment of its commitment to developing special funds and credit products for specific SME clusters and customer segments, the Bank of Industry has announced the establishment of N1bn fashion fund for women entrepreneurs. According to the Managing Director, BoI, Mr. Rasheed Olaoluwa, the initiative is in line with the efforts of the bank to deepen its support for the SME clusters and customer segments. Our Managing Director, stated that the bank was particularly excited about the fashion fund because of its potential impact on the Nigerian fashion industry and the entire economy. He said, “Fashion is an international, highly globalised industry, with clothing often designed in one country, manufactured in another and sold worldwide. “Globally, fashion industry revenue is over $1tn. “A growing number of shopping malls and e-commerce platforms are emerging in Nigeria for fashion designers and businesses to promote their brands to a mass market.” He added, “We see an opportunity to support Nigeria’s leading fashion businesses, to increase their production volumes and quality, thereby making them more competitive in both the domestic and international markets. “Fashion provides an important opportunity to diversify Nigeria’s economy and create jobs, particularly among the youths. “We are therefore confident that the launch of this Fund will help to catalyse the fashion cluster, help in creating millions of jobs and also in generating foreign exchange earnings for the businesses and the country.” According to Group Head in charge of gender affairs at the bank, Rakiya Zubairu, the fashion fund will be accessed by women who are into fashion business in all the 36 states of the federation. She added that the fund was designed for women-owned businesses noting that the women must own 50 per cent or more of the business to qualify. She said, “The N1bn fund will support women who are into garments, shoes, bags and accessories. “The target market will include limited liability companies and enterprises.” Also the Divisional Director, Large Enterprises, Mr. Joseph Babatunde, said the bank would contribute 75 per cent of the fund while the business owner would contribute the remaining 25 per cent. The President of the Fashion Designers Association of Nigeria, Funmi Ladipo, while appreciating the bank for the gesture, sought additional support for the establishment of a production hub where factories could be made available for mass production of clothes. She said, “With a production hub, our young graduates can have a centre where they can receive additional training and be readily employed. “Apart from creating jobs and encouraging people to patronise made-in- Nigeria clothes, it will save us the problem of chasing workers all over the place.”

Nigerian designers seeking funds for expansion can now approach the Bank of Industry which has launched the N1 Billion Fashion Fund for players at the micro-, small- and medium-scale levels. The Fashion Fund joins two other SME funds recently launched by the country’s development bank: the 5 Billion Cottage Agro Processing Fund and the 1 Billion NollyFund. Rasheed Olaoluwa, managing director/chief executive officer, BOI, said the Fashion Fund is in fulfillment of the bank’s commitment to develop special funds and credit products to deepen penetration of and enhance support to specific SME clusters. “We see an opportunity to support Nigeria’s leading fashion businesses to increase their production volumes and quality, thereby making them more competitive in both the domestic and international markets,” Olaoluwa said “In Nigeria, our own African prints, known as Ankara fabrics, have become very popular in the fashion world due to the ingenuity and industry of Nigerian designers such as Dakova, Frank Oshodia, Tiffany Amber and Deola Sagoe, among others. Amazing designs are now created using local fabrics and are featured in both local and international fashion shows,” he observed. Our MD pointed out that many of Nigeria’s fashion designers have received training in some of the best fashion schools in the world, and therefore have the intellect, talent, creativity, skills and drive to take Nigeria’s fashion industry to the next level on the global fashion stage. He said the growth in Nigeria’s urban population, the macro-economic environment, increasing purchasing power of the emerging middle class and a strong appetite for consumer goods are positive factors in favour of a flourishing fashion cluster. He explained that fashion provides an important opportunity to diversify Nigeria’s economy and create jobs, particularly among the youth, expressing confidence  that the Fund will help to catalyze the fashion cluster, create millions of jobs and also generate foreign exchange earnings for  businesses and economy. He disclosed that the bank has identified 34 SME clusters nationwide through which it will drive its new SME financing paradigm. “At the Bank of Industry, we have resolved to strategically approach the issue of SME financing using the cluster approach, which has been successfully implemented in many fast-growing economies in the world. India is a very good example, where hundreds of SME clusters have been identified and developed,” he explained. He further said that in the months ahead, more funds and product programs will be designed and launched to support the various SME clusters already identified. “Essentially, our cluster approach recognizes that one size does not fit all.  Consequently, we are able to tailor our lending criteria to the peculiarities of each cluster, based on a deep analysis and understanding of the dynamics of each SME cluster,” the BoI CEO added. Ojomo Ochai, director of arts and designs for British Council in Nigeria, said the bank is one of the Council’s most trusted and reliable partners. “We’ve worked with them on various projects. We are working with them around creative people and to train individuals on how to build more sustainable business. BOI has consistently shown willingness to invest not just for direct benefits, but for wider benefits of the industry,” Ochai said. Funmi Ajila-Ladipo, national president, Fashion Designers Association of Nigeria (FADAN), said there is the need to create a production hub for the industry. “I keep saying this all the time. If one person is given N3 million, and another person is given N6 million or N7 million, at the end of the day, it still amounts to nothing. We will still keep going round and round until we have a production hub,” Ajila-Ladipo said.“We have so many talented people all over Nigeria, not only in Lagos. We need to bring all these people together and give them opportunity. We want to stop consuming from other nations; we want to manufacture. We don’t want to buy those second-hand clothes. We don’t want to wear those rejects that they throw back at us,” Ajila-Ladipo further said. On her part, Nike Ogunlesi, MD, Rough & Tumble, while supporting the call for a production hub, said designers need to focus on building brands that will outlive them. “This is an opportunity to create jobs. The timing is right, so let us focus on the technical skills to build the industry. We need to have technical schools, train people, and show the world that we know what we are doing,” Ogunlesi said.

The bank of Industry disclosed that its total loan portfolio to the solid minerals sector of the Nigerian economy is now N24.6 billion. The dwindling oil revenue in recent times has made solid minerals development very imperative as a means of revenue diversification. The managing director of the bank, Mr Rasheed Olaoluwa, who made this disclosure at a forum organised by the bank for the key stakeholders in the sector, said that the essence of the event was to highlight the opportunities in the sector and sensitise both local and international investors, adding that the Nigerian economy, until now, had relied heavily on petroleum as the major source of revenue and foreign exchange earnings since the early 1970s.

Olaoluwa said that the country is endowed with abundant agricultural and solid mineral resources that could be leveraged to propel the country’s economic development. “It must be highlighted that the mining sector is a goldmine for many African countries. For instance, Zambia derives more than 70 per cent of its foreign exchange earnings from copper, the same can be said about Botswana and diamond, Guinea and iron ore, Ghana and gold, Namibia and uranium, etc. The National Industrial Revolution Plan (NIRP) which was launched in February 2014 was designed to leverage on Nigeria’s agricultural and mineral resource endowments to rapidly build up Nigeria’s industrial capacity and to improve the competitiveness of our locally produced items. I am happy to announce that the Bank of Industry has fully aligned its operations with the noble objectives of the NIRP with the establishment of dedicated Business Groups for Agro Processing and Solid Minerals respectively. Our total loans to the solid minerals sector stand at N24.6 billion,” he said.

According to him, if the country could effectively harness its 44 solid minerals already identified, the economy would change through value addition, employment generation, improved tax revenue and general economic growth. “One segment of the solid mineral sector in which Nigeria has done very well is in the conversion of limestone to cement where, with producers such as Dangote Cement, BUA Cement, Lafarge Cement, etc, Nigeria is now by far the leading producer of cement in Africa and a Top 10 producer globally. How can we replicate this success stories in other solid minerals such as iron ore? Most African minerals are exported as raw materials to the developed countries. Can Nigeria industrialise its solid mineral sector through mineral beneficiation, mineral processing and value-added manufacturing? How do we develop the required resources and technical skills?” he questioned.

Managing Director, Bank of Industry (BoI), Mr. Rasheed Olaoluwa, has put the loan disbursement to entrepreneurs under its Micro Small and Medium Enterprises Fund (MSME) in Niger State at N497 million. Beside the matching fund, he said the bank had on its own, disbursed direct loans in excess of N225 million to enterprises in the state. The Managing Director spoke while unveiling BoI’s Niger State office in Minna yesterday, stated that the gesture was to enable entrepreneurs harness the potential in the state to industrial scale. He also explained that beyond approving N44 million for the deployment of off-grid micro system in Bisanti, a community in the state, the bank had identified  SME clusters in areas such as shea butter, yam, soya bean, rice, sugar cane, melon, fish, groundnut and cassava. According to him, the distribution of the solar-based technology in the state would help to provide energy need for the industry, particularly the segment that has no access to the national grid. The BoI boss stated that the objective of the interventions of the bank in the state was to promote job creation and rapid industrialisation. The bank CEO also urged the state entrepreneurs to avail themselves with the services of the 23 Business Development Service Providers established in the North-central geopolitical zones for the packaging of bankable business proposals. Giving update on the MSME fund which is jointly funded by the development finance institution and Kogi State, Olaoluwa noted that while the bank received 263 loan applications amounting to N2.5 billion, 116 loans totaling N497.0 million were approved. Also speaking, one of the loan beneficiaries, Dr. John Akanya stated that he ventured into bread production in order to show to his people how standards help to promote businesses. Akanya, who is the immediate past Director General of Standards Organisation of Nigeria (SON), commended the bank for the transparent ways in which loan application is being processed. Mr. Oledibe Chidebere, who spoke on behalf Microcredit Beneficiaries in Niger State, stated that apart from provision of loans, entrepreneurs in the state had learnt a great deal on how to manage their businesses through the numerous seminars organised by the bank.

The renowned international rating agency, Fitch, has assigned Bank of Industry (BoI) a national long-term rating of AA+(nga) and national short-term rating of F1+(nga) as the national ratings reflect the bank’s creditworthiness relative to the best credits in Nigeria.

Fitch’s rating is coming on the heels of a domestic credit rating of A- secured by the BoI from a leading Nigerian credit rating agency, Agusto & Co, affirming that the financial institution remains in good financial condition and has a strong capacity to repay obligations on a timely basis.

At a long-term Issuer Default Rating (IDR) of BB- as well as a negative outlook and a short-term IDR of B, Fitch has advocated for increased support for the BoI by the federal government in order to improve the bank’s lending capacity and aid the realisation of its objective.

According to Fitch, BoI’s long-term IDR is at its Support Rating Floor (SRF) of BB-, which considers Nigeria’s ability to provide such support in a timely manner as and at when it is required, as indicated by Nigeria’s long-term foreign currency IDR of BB-.

However, Fitch noted, “The ratings could also be downgraded in the event of material change in the government ownership and/or any change in the bank’s policy role. An upgrade of the Nigerian sovereign would not necessarily lead to an upgrade of the BoI’s IDRs. The BoI’s national ratings are sensitive to any change in Fitch’s opinion of the BoI’s creditworthiness relative to the best credits in Nigeria,” Fitch added.

Speaking on the rating, the managing director of the BoI, Rasheed Olaoluwa, said, “The positive rating is an endorsement of our ongoing transformation project at the BoI and an affirmation of our strategic intent of adopting global best practices in all aspects of our operations.

It further affirms an improvement in Agusto’s rating of the development finance institution.”

According to the Managing Director, “We are determined to make increasing impact in our focus sectors and to continue to set the pace as Nigeria’s leading development bank.