Leveraging BOI Loans to Grow Businesses
Businesses need funds from time to time to maintain their cash flow. They require significant working capital to keep business operations running smoothly and increase profitability. Whether it’s buying new equipment, hiring and training staff, expanding premises or acquiring new inventory, business people need financing for their business.
There are various players in the market who can provide business loans. Non-bank financial companies, traditional banks, government institutions, and crowdfunding are multiple options where businessmen can apply for business.
If there is one place where entrepreneurs can get cheap or single-digit funds (often at a 9% lending rate), it’s from the Bank of Industry (BoI).
Nigeria’s industrial sector, which is BoI’s main focus, faces myriad challenges and issues that have significantly affected the pace of industrialization in the country and, subsequently, economic growth and development.
Consequently, the federal government has attempted to intervene over the years in certain sectors of the economy to accelerate the pace of industrialization and, subsequently, economic development. Intervention processes have been carried out by the federal government using funds, policies or generally by providing an enabling environment.
The Bank of Industry offers different loan facilities to Small and Medium Enterprises (SMEs) and Micro, Small and Medium Enterprises (MSMEs) among others.
Although some of the loans are an initiative of the Federal Government of Nigeria, they are designed to provide subsidized loans at 9% per annum and an all-inclusive interest rate.
BoI Roles in Corporate Finance
Created in October 2001, the BoI is largely a public development finance institution (DFI) responsible for promoting the emergence of a virile industrial sector. In other words, the BOI was designed to catalyze real sector transformation.
The Bank’s mandate is to provide financial assistance for the creation of large, medium and small enterprises; as well as the expansion, diversification and modernization of existing enterprises and the rehabilitation of ailing industries.
Its credit facilities
The BoI has a number of funds which entrepreneurs of all levels can access. The Bank of Industry targets companies that engage in manufacturing and processing activities. Targeted sub-sectors include; Agribusiness, Solid Minerals, Information Technology, Oil & Gas and Creative Industry.
The Banque de l’Industrie only finances businesses or companies and not a person or a group of people. The company/business must be duly registered and will need to provide a limited liability company registration number or business trading name before you can proceed with your application.
BOI financial assistance to SMEs starts from N5 million. However, loans below 5 million naira are provided on the BOI Matching Funds platform which is operated in collaboration with various state governments and on their Bottom of the Pyramid (BOP) program which is operated by micro-finance banks.
BoI provides access to funds for startups, SMEs and large companies and through access, it facilitates the entire process, right from applying for a pre-loan.
BoI Managing Director/CEO, Mr. Olukayode Pitan, at the Bank’s 62nd Annual General Meeting (AGN) in Abuja, said the bank’s upward trajectory in performance and results has enabled it to attract local and foreign capital in order to fulfill the obligations of its mandate.
“Most recently, in February 2022, the BoI successfully issued a €750 million Eurobond to strengthen its capital base to support its customers and the real sector of the Nigerian economy.
“During the year under review, the Bank disbursed a total of N213.63 billion to 30,406 Nigerian businesses through direct and indirect methods. This represents a 47.3% increase over disbursements in 2020.
“The 2021 disbursement includes N2.99 billion to 22,120 farmers through the bank’s smallholder on-lending proceeds; and N1 billion to 4,000 micro-retailers through the Bank’s MSME Distributor Financing Scheme. Through these interventions, around 950,640 direct and indirect jobs were created in 2021,” he said.
Pitan also reaffirmed the bank’s continued efforts to support its stakeholders and achieve its mandate.
President Muhammadu Buhari previously commended the bank for disbursing over N1.24 trillion to 4.2 million micro, small, medium and large enterprise beneficiaries.
Buhari said the bank had continued to successfully execute its mandate as a political institution of the federal government, providing loans at single-digit interest rates to manufacturers.
He said: “To further strengthen its ability to impact the industrial sector on a transformational scale, I have approved the issuance of a sovereign guarantee to help the Bank raise funds from the Eurobond market. I am pleased to note that the Bank has recently finalized the operation by raising 750 million euros from international investors.
“The proceeds of this Eurobond will be paid to large, medium and small companies and women entrepreneurs with bankable projects. It is commendable that the Bank gets its own funds for loans based on its quality ratings by rating agencies.