BoI targets bonds to fund industrialisation plan The Bank of Industry (BoI) said in Lagos at the weekend that it urgently requires “new and significant” funding to make meaningful impact in the National Industrial Revolution Plan (NIRP) of the Federal Government over the next two years. Speaking at a news conference, the new Chief Executive of BoI, Rasheed Olaoluwa, said in the face of mounting pressure on government’s resources and the effect on its key shareholders like the Ministry of Finance Incorporated (MOFI) in terms of financing, and the Central Bank of Nigeria (CBN), there is a resolve to explore new funding alternatives to realise its key mandates. Going by discussions with key stakeholders, Olaoluwa, who assumed office about two months ago, said issuance of bonds in the domestic and international markets has become an option under consideration. He expressed hope that the sector-specific intervention funds by the CBN, as well as the Federal Ministries of Agriculture and Solid Minerals, among others would continue. Olaoluwa added that he was also looking at multi-lateral loans from international agencies, various intervention funds, a continuation in the flow of managed funds, high net worth individuals and foundations, just as “other sustainable annuity sources that may become statutorily imperative in the medium-to-long-term.” Discussions, he stressed, are ongoing with the African Development Bank (AfDB), adding that the new funds would be invested in the four key sectors identified under the NIRP as those that have comparative advantage, such as agriculture, where efforts would be made to add value to produce before being exported. There is also the oil and gas, and energy which require a lot of resources to raise the value adding proposition in the petrochemical and fertilizer production, in addition to gas infrastructure, as well as light manufacturing, and SMEs. Continuing, he said the recent rebasing of Nigeria’s GDP emphasised the need for BoI to take the lead in the development agenda, just like its pairs in the developing world, including Brazil’s BNDS. “The transformation of the BoI has become a national imperative,” he added, hence the need for new funds over the next two years to impact on the national revolution. Olaoluwa also spoke of plans to continue collaborations between the agric ministry and BoI, particularly in financing the nation’s agric value-chain, following which there has been various meetings with the CBN Governor, Godwin Emefiele, where it was agreed that there is need to address the development agenda and for a robust intervention from the apex bank. To utilise the fresh capital sourced with maximum results, Olaoluwa said the global best practice must be adopted in the management of BoI, whose managers would be engaged in the pursuit of goals and objectives in the next four years such as good corporate governance. He confessed that this “is not the best currently like everywhere else. We would strive towards global best practice.” There would also continue to be a sharp focus on the agency’s core mandate, sound risk management and compliance, venture capital investment, partnerships and collaborations, customer service and responsiveness and linkage between innovation and industry, Olaoluwa added. Going forward, he said, “what is critical are the issues which are clear, including the provision of low interest, long-term loans and the experience gathered over the past 26 years stands me in good stead”. He said BoI was keen on keying into the government’s Automotive Policy by assisting in local manufacturing of vehicle components like upholstery, batteries. Olaoluwa said BoI will continue to pursue lending with an eye on the social impact, development, and SMEs, while ensuring that loans continue to remain of good quality. He, however, lamented that a large percentage of loan applications received by BoI are sub-standard, leading to delays as the applicants go back and forth, following which the bank has “met with Business Support Firms BSFs to address the large percentage of substandard loan applications as we have discovered that a good way out is to engage with BSFs who will receive the applications and help review them as they better understand how a bankable proposal should look like.” He put total loans granted by the BoI at N692 billion to date, directly and through intervention funds, creating close to a million jobs in the process, even as he said the ratio of non-performing loans is high, “but not excessively so”. Of the total loan disbursed, he said, the various CBN intervention funds accounted for N468 billion or 67.63 per cent, and that the loans are 100 per cent performing. Ratio of non-performing loans under the SME/textile garment fund is 19 per cent, as against 15 per cent in South Africa. The new BoI boss also spoke of plans to partner SME-friendly banks in the provision of loans for working capital to support the agency’s loans for plans and machineries.
Posted on: Mon, 14 Jul 2014 11:02:10 +0000
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