By Tajudeen Kareem
The Nigerian Senate last week opened a public hearing on its intention to harmonize the functions of development finance institutions in the country towards the establishment of an apex finance house, the National Development Bank of Nigeria.
The lawmakers are considering a bill to establish the National Development Bank of Nigeria. The drafters of the bill want the proposed bank to provide loans to small, medium and large industrial enterprises with five to ten-year maturity, with a grace period of one to three years depending on the enterprise. The bank will also provide working capital loans to eligible enterprises where projects are unable to secure a loan from the banking system; the loans could be in naira or foreign currencies depending on the source of available funds for the requirement of the eligible enterprise or project.
The House of Representatives, acting the same script, has raised a committee to examine the modus operandi of state-owned development finance institutions, DFIs. Listed for periscope are the Bank of Industry, Bank of Agriculture, Nigeria Export -Import Bank, Nigeria Export Promotion Council, Small and Medium Scale Enterprises Development Agency, National Economic Reconstruction Fund and Federal Mortgage Bank.
At the inauguration of an ad hoc committee to review the activities of these agencies, the Deputy Speaker, Hon. Yusuf Lasun hinted that the National Assembly was desirous of addressing inefficiency in the system to “achieve their mandate and responsibility”. Committee Chairman, Hon. Chukwuma Anohu said, inter alia, “we are confident that the current economic recession being experienced in the country can be reversed within the shortest possible time if the DFIs are made to live up to their statutory mandates, herein lies the impetus and imperative of our extant assignment”.
The foregoing may be described as diversionary and a cheap avenue to make the lawmakers look serious in tackling the economic challenges facing the country. The National Assembly ought to think out of the box in suggesting better strategies to revive the economy, create jobs and make the young, vibrant population more productive.
While the lawmakers beat about the bush, the performance of BOI this year speaks volume. The records can be interrogated across the country. Before we look at the specifics, this financial year, international and domestic rating agencies have upgraded the bank, to affirm its viability and effectiveness in discharging its core mandates. Specifically, Moody’s upgraded the bank from Ba3 to Aa1 while Augusto & Co rated it AA- up from A+. Two years running, BOI has maintained AA+ in FitchRatings.
Experts have interpreted these ratings to be a measure of confidence in the viability of BOI. Mr. John Akigbe, a development economist said: “The bank recognized as being able to meet its commitments to its lenders. They expect it to be in business for the long haul. It is rated as a stable institution because of the likelihood of government support.”
So what are the facts behind the ratings of BOI?
The Buhari Administration has identified agriculture and solid minerals as templates to diversify the economy. The diversification space thrown open by the administration in agriculture, solid minerals and petroleum resources industries has the capacity to overhaul the ailing economy to accomplish the job creation vision of government if well incorporated and sustained.
In the past one year, the BOI has aggressively and consistently stayed on the right track, providing financial leverage in creating or energizing large, medium and small enterprises; as well as expansion, diversification and transformation of existing enterprises; and rehabilitation of ailing industries.
The bank, to restate, is mandated to motivate local entrepreneurship and restore indigenous economic activities where comparative advantages can be harnessed to generate employment and foreign exchange.
Despite the down turn in the economy, and dwindling resources, BOI as remained steadfast in keeping to that task of complementing government on policies that bother on job creation and business support as conceived by the Buhari administration.
At its 56th Annual General Meeting, the acting Managing Director of BOI, Mr. Waheed Olagunju unveiled plans to disburse N212 billion to support job creation in 2016 alone, focusing on financial liability, developmental impact and social development of the country.
The bank also pledged to support businesses that add value to local raw materials through value chain strengthening, generate employment for the youth and unemployed and create wealth while producing products for export.
Indeed, the bank has partnered various local and international development organizations and many states, assisting them with acquisition of cognate skills and capital to realize their business goals and attain its national development goal. A few weeks ago, it sealed an MOU with Laurel School of Mines to train 1600 entrepreneurs in gemstone cutting and polishing; a move that will engage the youths and create many jobs at the local level.
Through its Youth Entrepreneurship Support programme, YES – Project, the BOI launched a N10 billion grant in 2016 to assist youths to start and aid their businesses. The project was part of the Federal Government’s youth employment scheme, a platform from which about 36,000 jobs were mapped out to be created annually.
The YES Scheme is exceptionally friendly. Unlike what is obtainable in the commercial banks, it offers participants up to N10 million loans at single digit interest rate with three to five years repayment tenure.
In collaboration with the National Youth Service Corps, BOI has a scheme for serving corps members for its Graduate Entrepreneurship Fund (GEP – Project). The initiative is a special N2 billion empowerment programme for serving NYSC members to draw loan facilities of between N500,000 and N1 million at 9 percent interest rate and it has 3 – 5 years repayment plan with 6-12 months moratorium. This is a deliberate effort to encourage serving graduates participating in the NYSC to venture early into business and be employers of labour.
Pursuing its agro-based support mandate, the BOI, working with the Federal Ministry of Agriculture and Rural Development, in 2014, unveiled a N5b Cottage Agro Processing Fund. It also supported the ministry with a N13billion Rice Intervention Fund for the establishment of 10 integrated rice mills and six cassava mills across the country.
And to resuscitate ailing industries, the Kaduna State Governor, Mallam Nasir el-Rufai recently disclosed that his state was partnering with the bank to create jobs. The bank has supported the state to take controlling shares in Peugeot Automobile Nigeria.
Kareem is the Chief Consultant/CEO