|BACKGROUND||The BOI Fashion Fund (FF) is proposed as a special fund to cater for the needs of businesses operating in the fashion industry. It is expected to address gaps in access to credit facilities in this sector.
Part of the key objectives of the Fashion Fund product paper would be supporting initiatives that can improve financial literacy and industrial entrepreneurship development for players in the fashion industry.
|RATIONALE||· Fashion is an industry that should be valued because it relies on human creativity for survival. This is a resource that is not finite as human creativity is limitless and will never run out as long as human beings exist. For sustenance, it relies on the human craving for things of beauty; this is a craving that is never satisfied and changes from time to time.
· The fashion industry is fast growing in Nigeria and it accounts for 0.47 per cent (N380 billion) of Nigeria’s rebased Gross Domestic Product (GDP).
· The Fund will support skills acquisition to promote and develop local labels and brands for those targeting high quality niche products and markets as well as those targeting the mass market. This will enable them take advantage of the significant value addition in whatever area the entrepreneur is operating in the fashion industry.
· This Fund will address the perennial problem of access to finance particularly, working capital, which is the bane of small businesses.
· The Fund has the potential to bring about higher efficiencies, productivity and job creation.
The fashion industry by its nature has a very wide range of goods and services that fall under its purview.
In defining the market structure, we shall adopt a three-pronged approach:
· Retail business (direct sales by producers)
· Wholesale buyers (Retail shops)
· Distributors (Agents)
The producer will be expected to have at least one outlet, which will be a display area for her products. Sales will be made to walk-in customers at this location.
The producer is expected to develop a good relationship with retail shops that have a wide network of stores around the country and even beyond. Jumia, Konga and other similar online retailers should also form part of the wholesale buyers with which the business will have a relationship.
These are middlemen who will buy goods from the Fund beneficiary for sale through networks they would have developed in the course of their own businesses.
|Limited Liability Companies and Enterprises promoted by Nigerians.|
|PROJECTED IMPACT||The fund shall be used to upscale businesses in the Fashion Industry.|
|PROGRAM LIMIT||N1.0 billion|
|MAXIMUM OBLIGOR LIMIT||N30.0 Million.|
· 1% Appraisal Fee
· 1% Commitment Fee
· 0.125% Monitoring Fee (to be paid quarterly)
· Interest rate: 9% per annum payable at the end of every month.
|TENOR||· Maximum of five (5) years|
|MORATORIUM||· Maximum of 12 months (from date of loan disbursement)|
|· 25% equity contribution.
· Personal Guarantee of Chief Promoter
· Lien on stock of trade and items of equipment.
· Deposit of 5% of the loan amount in an interest yielding joint account opened by the company with a designated bank with BOI as sole signatory.
· Notarized Statement of net worth of two guarantors who must be reputable persons.
|Other Conditions||· Strong and reliable monthly net cash flows that can support monthly loan repayment at ratio 3 to 1 (i.e. net cash flow to loan principal repayment).
· Referral Letter from a recognized Organized Private Sector (OPS) body, guild or association. e.g. Fashion Designers Association of Nigeria (FADAN)
|· BOI Term Loan/CBN MSMEDF – 75%
· Equity – 25%
|Phased in accordance with agreed milestones.|
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