The Bank of Industry (BoI) believes firmly on the need to develop Small and medium Enterprises (SMEs) and the Micro, Small and Medium Enterprises (MSMEs) towards boosting the country’s economic growth. Giving inisght on how SMEs can access its facilities, Acting Managing Director, BoI, Mr. Waheed Olagunju, said: “Tthe bank’s objective is to re-examine the strategy or to explore means of mitigating the numerous challenges inhibiting the SMEs and MSMEs in the country from accessing loans.”
• Mr. Waheed Olagunju, Acting Managing Director, BoI
• Mr. Waheed Olagunju, Acting Managing Director, BoI
He said: “The bank’s SME Directorate handles applications for mainly long and medium term loans ranging between N5 million and N500 million. The Large Enterprises Directorate processes those above N500 million.
Requests below N5 million are processed under BoI’s Bottom of the Pyramid (BoP) scheme under which we lend to micro enterprises through appointed microfinance banks, known to have specialised skills for handling highly labour intensive micro enterprises, at single digit interest rate.
“We also lend directly to some micro enterprises at various concessional interest rates under some special funds that BoI manages on behalf of its development partners that include state governments, some federal ministries as well as agencies and the Dangote Foundation. For instance, the N10 billion MSME Fund that the bank jointly floated with the Dangote Foundation attracts an interest rate of five per cent. This was arrived at because Dangote’s fund is at zero per cent while that of BoI is at 10 per cent.”
In view of the inherent weaknesses of the SME sector, Olagunju said that the rejection rate of loan applications that emanate from SMEs is in excess of 90 per cent.
“We receive poorly prepared applications that do not contain the information required to carry out proper appraisals. It was in order to address this problem that 122 Business Development Service Providers (BDSPs) were appointed through a competitive process in November 2014.
“At this rate, we are looking forward to supporting at least 1,220 beneficiaries through our BDSPs annually which amounts to more than 25 percent of what was achieved in 13 years when we assisted 4,126 beneficiaries. It is envisaged that the operations of the 1,220 potential beneficiaries would lead to the creation of several thousands of direct and indirect jobs especially amongst the suppliers of their input and distributors of their products.
Olagunju, during BoI media parley tagged: ‘Sustaining Nigeria’s Industrial Sector Growth through Impactful Partnerships’, said the major difference between the rich and poor nations of the world is their level of industrialisation, saying that industrialisation is a multidisciplinary process where everybody has a role to play to achieve set objective.
He added, “We do not need rocket science to transform our economy, other oil producing countries have diversified their economies. There is need to increase the contribution of the manufacturing sector to our Gross Domestic Product (GDP) to double digits.
“The media has a role to play in economic transformation because it is one of the biggest change agents in all societies. The media has to partner with the BoI to achieve this. We need your partnerships, we need your collaborations. The only way we can achieve inclusive growth is if we embark on commodity based industrialisation strategy.”
He said BoI is also collaborating with developmental partners, while encouraging state governments to establish industrial parks to localise industrialisation in order to reduce the start and operating expenses for entrepreneurs.
Mr Jonathan Tobin, the Executive Director, Corporate Service while delivering a paper on ‘De-risking Agric Financing: A case study of NIRSAL and Kebbi Rice Programme,’ said that the Central Bank of Nigeria (CBN) is trying to reduce the food import bill of commodities that exert pressure on the nation’s foreign exchange.
Tobin said that the apex bank adopted a strategy of encouraging local production in rice, wheat, fish and oil palm which were identified as top most on the import bill.
In her words, Executive Director, Financial Inclusion, Mrs.Toyin Adeniji, explained that the Government Enterprise Empowerment Programme (GEEP) would ensure that people at the lower pyramid have access to loans directly without any need for intermediaries.
According to her, it is a targeted financial inclusion and empowerment programme to deliver maximum impact and scale to the economically underrepresented groups in the country. “The programme focuses on provision of micro credit to MSMEs and would include targeted market women and traders, artisans’ enterprising clusters and youths, farmers and agric workers.”
One of the beneficiaries of BoI SMEs loan, Chief Executive Officer, Crown Natures Nigeria Plc, Mrs. Omolara Aromolaran, said she founded the company to fill a gap in the market, using her Lekki Free Zone based company to take her product to the rest of Africa and beyond.
Nigerian cap and hat manufacturer, Crown Natures has moved its manufacturing facility to the Lekki Free Zone (LFZ) with one overriding ambition. It wants to introduce world markets to ‘Made in Nigeria’products. Aromolaran, got the idea to start the business when she needed caps for a promotion.
She discovered, to her surprise, that there was not a single cap manufacturer in Nigeria. She enquired in Europe and the US, but all roads led to China. So in 2006 she enlisted the aid of a Chinese manufacturer to help set up a cap factory in Lagos and to train local staff. That was the start of Crown Natures.
The company makes a variety of baseball and polo caps, sun visors and bucket hats in a range of colours, including vivid African prints, and in corporate livery to order. It has added T-shirts to its range, and relocated production to a unit in the LFZ standard factories two years ago.
Her words, “In our domestic market, we have several regulatory bodies and a lot of bureaucracy. LFZ provides non-stop facilitation of business, with all the government agents under one roof. The regulators are co-operative and friendly, recognising that it is important to get on and do business. And that gives us an edge.”
She added that operations have improved greatly because importing raw materials into the zone is much easier. “Before, with customs checking in the ports, it could take six weeks before the contents were released and there was no guarantee that you wouldn’t lose items,” she said.
Given that Nigeria has been importing up to 50 million caps and hats a year, in spite of a ban on imports, there is clearly a domestic market. “But all of Africa goes to Asia to import these products, so we have the African market available to us too,”she said.
That is not the only business Crown Natures would like to take away from Asia, as the company now plans to expand into sportswear. “We want to produce for Nike and Adidas. “We want the English Premier League football clubs to buy their jerseys from us. Asia is quite far from these markets. Africa is nearer, and we are able to match Asian prices.
“Large retailers such as UK retailer Marks & Spencer order from Bangladesh and India. Africa could be another area for such companies to look at,” she said. Crown Natures also has its eyes on the US market, where Nigeria enjoys trade benefits. African-Americans are identifying with their African roots, and African fabrics are now popular in the New York clothing market.
01 August, 2016