Category: News

BOI Secures A- Rating From Agusto & Co

The Bank of Industry (BoI) has secured a domestic credit of A- rating by Agusto & Co, a leading Nigerian credit rating agency.  By the rating , the Bank has been adjudge to be a financial institution with good financial condition and a strong capacity to repay obligations on a timely basis and it is also the first Nigerian Development Bank to be so rated.

Augusto & Co was engaged to carry out an assessment of the bank’s performance and to issue a credit rating based on a multitude of qualitative and quantitative factors. The objective was to provide useful benchmarks for the Bank against global best practices. The engagement was successfully completed and a rating of A- with a stable outlook was issued in December 2014.

The Bank had in 2014 commenced the implementation of a corporate transformation project leading to the development of a five year strategic plan while is currently being  implemented.The key strategic issues addressed by the transformation  plan include the diversification of the bank’s funding base, development of robust risk management systems, effective cost management, performance management system, credit process re-engineering and automation, customer service delivery, new product development, loan quality, corporate governance, national coverage, and stakeholder management.

The Managing Director, Mr. Rasheed Olaoluwa said, “The positive rating is an endorsement our ongoing transformation project at the BOI, and an affirmation of our strategic intent of adopting global best practices in all aspect of our operation.” He added, “We are determined to make increasing impact in our focus sectors and to continue to set the pace as Nigeria’s leading development bank.

In a bid to address financing challenges confronting small and medium enterprises in the country, the Bank of Industry (BoI) has signed a memorandum of understanding with 10 deposit money banks on new frameworks to support the SME sector.

The commercial banks include Access Bank Plc, Diamond Bank Plc, Ecobank Limited, Fidelity Bank Plc, First Bank Limited, First City Monument Bank Limited, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited, and United Bank for Africa Plc.

Under the new framework, prospective customers of the Bank of Industry would access the bank’s funds based on its risk acceptance criteria, while the commercial banks would provide working capital to the SMEs based on agreed terms under the framework and the banks’ individual risk acceptance criteria.

Speaking during the signing of the agreement, the Managing Director of BoI, Rasheed Olaoluwa, explained that the bank, having understood the financial challenges encountered by small businesses decided to deploy a multi-pronged approach to address the problem of poor loan packaging and access to finance through the earlier appointment of 122 Business Development Service Providers (BDSPs) and present partnership with 10 commercial banks.

According to him, the pact, which would be due for renewal after the expiration of the initial three years period, will see BoI providing financial intervention for sectors like agro-processing, solid minerals and metals, light manufacturing, logistics, and other critical sectors identified under the Nigeria Industrial Revolution Plan.

Indeed, the pact would see the BoI providing loans to beneficiaries at an interest rate of 9-10% per annum and a tenor of at least five years as well as moratorium period of 12 months.

On part of the commercial banks, working capital facilities would be provided at an interest rate of 19 per cent, representing a combination of the current Monetary Policy Rate and six per cent interest from commercial banks with a tenor of at least 12 months.

He noted that BoI decided to leverage the banks’ branch network to further reach its customers as well as increase its intervention across spheres of small businesses.

Mr. Rasheed Olaoluwa explained that the synergy between BoI and the SME-Friendly Banks, which is unprecedented between a Development Finance Institution and commercial banks, will undoubtedly foster greater access to finance for SMEs, financial inclusion for Nigerians and also engender wealth creation and accelerated job creation for Nigerians.

President Goodluck Jonathan  hosted a presidential launch to unveil the  top 100 companies operating in Nigeria under the Top 100 Business Initiative designed to mark the Nigeria centenary. The President , stated that the Federal Government identified 100 companies contributing to the nation’s economic growth and decided to recognize them.

Mr Aganga said, “Behind Nigeria’s successes are real companies which do business every day. These companies create jobs, employ our people and they keep the economy growing that is why we organised the top 100 companies’ event for the first time.”

“These companies have built considerable scale in Nigeria and continue to show strong commitment to invest more”, he added. The top companies initiative which coincide with Nigeria’s centenary year, cut across various sectors such as such as oil and gas, telecommunication, construction, food manufacturing companies, among others.

Pioneer indigenous car manufacturer, Innoson Vehicle Manufacturing Company Limited, over the weekend, rolled out 500 made-in-Nigeria cars.

Speaking at the launch, the Chairman, Innoson Group, Dr. Innocent Chukwuma, whose company is one of the ten inaugural members of the Bank of Industry Hall of Fame, revealed that his intention is to make cars more affordable for Nigerians, while creating employment for Nigerians and boosting the local economy.

According to him, the journey to manufacturing automobiles started with making motorcycles, and later to buses “because of its high demand in the country”. He added that the list of offerings from IVM increased later, with the addition of Sports Utility Vehicles (SUVs), pick-up vans, trucks and now cars.

Chief Chukwuma averred that the raw materials for his products were mostly sourced locally and that his buses, trucks and SUVs already enjoy nationwide acceptance, which he believes will also apply to the latest addition – cars. He promised Nigerians that “IVM cars will never disappoint Nigerians. We are here not only to promote the economy, but also to cre­ate employment for Nigerians. If we have more demands of our vehicles we will stand firm to increase our workforce thus reducing unemployment level in the country. I, therefore, enjoin Nigerians to take advantage of this new dawn, the IVM ve­hicles are their own and are here to serve them for the better”. If his antecedents are anything to go by, then his target of reducing the cost of cars look like a possibility, given what his company achieved with the local manufacturing of motorcycles.

In a bid to address challenge of access to credit for SMEs, and to hasten the credit delivery process, the Bank of Industry (BOI) has signed service agreements, engaging 122 Business Development Service Providers (BDSPs) to increase SMEs’ capacity to apply for and secure financing from the Bank.

Speaking at the event, the Managing Director/CEO, Bank of Industry, Mr. Rasheed Olaoluwa stated that this move had become imperative because even though SMEs  account for over 90% of the companies in Nigeria, account for half of the nation’s GDP, and provides employment for more than 30% of its populace, many SMEs have not been able to attract funding because of poorly nackaged and non-bankable business plans and proposals submitted to secure funds.

He added that this strategic partnership with BDSPs was in furtherance of the Bank’s core mandate “of providing long-term financial and business support services to large, medium and small projects”. He also pointed out that this would also help the Bank fulfil its obligations towards the success of the National Enterprise Development Programme (NEDEP), of which the Bank is a key stakeholder.

Mr. Olaoluwa revealed that the selection process that brought about the 122 BDSP firms was rigorous and that the selected companies were placed in three categories, based on their capacity and preferred areas of coverage. BDSPs with a national coverage totalled 28, regional coverage BDSPs were 74, while state-focused BDSPs were 20 in number.

Speaking further, the MD pointed out that the services the BDSPs were expected to provide include “collaborating with BOI to identify credible SMEs that require finance; developing bankable business plans and proposals for SMEs to facilitate their access to finance…guided by BOI’s Risk Acceptance Criteria (RAC)…and ensure that a sound business model id developed and presented; collaborating with BOI to conduct periodic post-finance monitoring of the SMEs.” Other services are to provide post-finance services such as mentorship, hand-holding, financial advice and encourage SMEs to inculcate best practice; while supporting SMEs to develop synergies and linkages with large enterprises, industrial buyers and suppliers along the value chain.

On their part, the BDSPs are expected to make full disclosures to BOI and ensure that all facts presented in loan applications are not misrepresented. They are also required to follow the Bank’s RAC in assisting SMEs access funds, and a success rate of at least 40 percent is anticipated from every BDSP. Further information on the BDSPs can be found on the Bank’s website: www.boi.ng/bdsp