Sam Diala examines the role of Bank of Industry (BoI) in Nigeria’s economic development and highlights the institutional arrangements and policy directives that aim at achieving the organisation’s Mandate
The reinforced platform on which the Bank of Industry (BoI) has repositioned itself in the last 12 months will certainly boost its operational effectiveness. Additionally, it will alter Nigeria’s economic landscape, in a positive dimension, as key players take full advantage of the gains that will emerge from the streamlined process – as desirable outcome.
From inception, the specialized development bank has channelled its members’ energy towards realizing its Mission: “To transform Nigeria’s industrial sector by providing financial and business support services to enterprises,” and attaining the Vision – “To be Africa’s leading development finance institution operating under global best practices.”
The evolution process the financial institution has passed through over the years has reinforced the determination of the members to stick to the bank’s 27-word Mandate: “Providing financial assistance for the establishment of large, medium and small projects as well as expansion, diversification and modernization of existing enterprises, and rehabilitation of existing ones.”
Taken together, BoI is posed to play unique developmental role in the diversification and industrialization projects of Nigeria whose economy is now ranked 21st in the world, and first in Africa. With a population of over 170 million people and large pool of productive labour force, what BoI is engaged in can be referred to as silent revolution in economic transformation.
At the annual media interactive session of its Management and media practitioners in Lagos Saturday (May16), the entire management detached itself from the comfort zone of their cozy offices in high-rise edifice where the lagoon breeze offers soothing effect to their virtually over-taxed brains.
Of course, unlocking the vast economic opportunities that ‘crowd’ our economic landscape is not a task for casual thinkers.
As I observed in my earlier write-up concerning the challenge of exploiting identified, real and potential wealthcreating opportunities that lie in our environment (see “Bank of Industry: Strengthening Capacity for Local Entrepreneurship” – The UNION, April 13, 2015, p.39), three major government institutions continue to update us on their findings in this regard. The institutions are the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), and the Nigerian Stock Exchange (NSE).
For instance, the official rebasing of the economy on April 5, 2014, triggered huge investment appetite that has seen foreign and domestic investors deepen their search for wealthcreating frontiers in our environment using the vehicles of foreign direct investments (FDI) and foreign portfolio investments (FPI).
Reports by the Central Bank of Nigeria (CBN), Nigerian Stock Exchange (NSE) and National Bureau of Statistics (NBS) reveal active domestic and foreign participation in the economy, especially on Nigeria’s bourse. Impactful sectors like Service, Industry, Telecoms and Agriculture, have taken emphasis away from Oil and Gas and offered prospects for promising returns that squarely meet the development needs of the economy.
The underlying themes of all the reports are the imperative of unlocking the vast opportunities identified in viable and fast-growing sectors which existence suffered under the opacity of over-concentration on the oil and gas sector. Introducing effective policy framework to drive long-term and sustainable investments that create jobs, multiply value chain and reposition the economy for active diversification, became obviously imperative.
From manufacturing to agriculture, servicing and trading, Nigerian entrepreneurs ‘invade’ various areas of endeavour, either on their own or in collaboration with foreign investors, whose appetite for profit continue to push for a thriving economy. This creates funding and skill-building challenges that only well-equipped institutions and professions can undertake successfully. Funding needs to exploit the bourgeoning economic opportunities, especially through small enterprise set-ups, is the role of the BoI. By its purpose, therefore, BoI offers access to funds for start-ups, Small and Medium Enterprise (SMEs), and large enterprises results in facilitating the entire process of empowerment which investors need to create jobs and value.
The bank’s portfolios offer channels of facilities designed to address the funding needs of Nigeria’s 17 million Micro, Small and Medium Enterprises which contribute 45 per cent of Gross Domestic Product (GDP), as well as other bodies, organisations and individuals. To add a fillip to the realization of the objective, the bank created an administrative and operational division that oversees small and medium enterprises.
The structure cascades down to departmental and unit levels with articulated mandates that see to it that the necessary support is provided to the needed beneficiaries. The arrangement of setting up offices in each of the six geo-political zones of the country is strategic to the achievement of the SME objective.
Example of BoI commitment to industrialization of the country is its Cottage Agro Processing Fund (CAPF). It was designed to support the establishment of cottage agro processing plants that will produce food products and raw materials for industries within and outside the Staple Crop Processing Zones (SCPZs) across Nigeria.
To tackle the capacity challenge in the areas of processing and preservation, BoI’s CAPF takes advantage of Nigeria being richly endowed with abundant agricultural products available in every state of the federation. This is to tackle the huge loss and wastages that result from virtually non-existent processing and preservation facilities.
It was in a bid to tackle this challenge that the CAPF was established to support the establishment of cottage agro processing plants. These plants will produce food products and raw materials for industries within and outside the Staple Crop Processing Zones (SCPZs) across Nigeria.
According to the bank, “The Fund will be accessed by Limited Liability Companies, Enterprises and Cooperative Societies engaged in the processing of agricultural products either into finished food products or raw materials for industry or for the export market.
“The products include; Cassava, Oil Palm, Rice Paddy, Groundnut, Yam, Maize, Sorghum, Aquaculture, Livestock, Cocoa, Shea nut, Plantain, Cashew, Tomato and all their individual derivatives.”
Mr Rasheed Olaoluwa, Managing Director/Chief Executive Officer, explained at the event last week that BoI is run on a tidy platform that guarantees professionalism and effectiveness. For instance, pruning the bank’s non-performing loans (NPL) to less than 5 per cent in an environment like ours is not a mean task.
This is because, many entrepreneurs do not believe that the bank’s facilities are meant to be paid back. Olaoluwa hinted on this when he said, “Many Nigerians, including the highly placed, in all fields of life, regard the loan granted them as their share of national cake. It is amazing when a wellrespected and highly placed Nigerian secures a loan from BoI and does not see why he should pay back.”
What the bank’s management is doing is to over-stretch its members by ensuring that the bank delivers. And it does. With a total operating income of N27.10 billion in 2014 as against N24.94 billion in 2013, for the Group, the development financial institution recorded profit before tax (PBT) of N5,19 billion higher than the N2.18 billion achieved in the previous business year.
Despite the expansion which is driven by the urgency in maximizing potential and identified opportunities, the Group’s total operating expenses dropped from N23.24 billion in 2013 to N21.46 billion in 2014. Olaoluwa explained that “In this organization, everyone must learn to do things right and does it. This is because every action has a consequence. When you drum it into the ears of people that their actions, whether good or bad have consequence, they would have