OPPORTUNITIES FOR BUSINESS/PROJECT FINANCING FROM BANK OF INDUSTRY LIMITED

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OPPORTUNITIES FOR BUSINESS/PROJECT FINANCING FROM BANK OF INDUSTRY LIMITEDA PRESENTATION BY PACQUEENS IRABORINTRODUCTIONMicro, Small and Medium Enterprises (MSMEs) are…
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OPPORTUNITIES FOR BUSINESS/PROJECT FINANCING FROM BANK OF INDUSTRY LIMITEDA PRESENTATION BY PACQUEENS IRABORINTRODUCTION
  • Micro, Small and Medium Enterprises (MSMEs) are recognized the world over for their high potential to promote economic growth and development. In Nigeria, they constitute over 90 percent of enterprises.
  • They have an integral role to play in industrial development and restructuring, satisfying rising local demand for services, which will allow for increased specialization and supporting larger firms with inputs and services through linkages.
  • While large businesses and corporates have the ability and resources to easily expand, this may be more challenging for MSMEs as there are obstacles they need to overcome in order to thrive.
  • CHALLENGES
  • SMEs are confronted with several challenges which hamper their growth and consequently, the nation’s economic development. The major challenges that need to be addressed immediately have been identified as, but not limited to:
  • High cost of doing business occasioned by poor infrastructure (power, roads, water, etc), multiple taxation, high cost of legal documentation of credit facilities at both the States Lands Registries and the Corporate Affairs Commission (CAC).
  • Bureaucracy in obtaining title to land and State Governors’ consent to mortgage property, etc.
  • Inadequate capacity building on the part of the SMEs in the areas of entrepreneurship, skills acquisition, etc and on the part of the financial institutions in understanding the dynamics of the SME sector resulting in their perception of the sector as high risk.
  • Poor attitude to loan repayment by the borrowers.
  • Limited access to credit occasioned by the above factors among other reasons.
  • POSSIBLE SOLUTIONS
  • Addressing power and other infrastructure challenges. This is already in progress as part of the Federal Government’s Power Sector Reform Programme and financial/technical support through the Central Bank of Nigeria (CBN) for the Power sector.
  • Adopting a cluster approach to Micro, Small and Medium Enterprises (MSMEs) development by setting up Industrial/Cluster Parks with all necessary amenities. This would address the issue of infrastructure, high legal documentation registration fees, etc.
  • The cluster approach shall examine the possibility of setting up small renewable energy (hydro, wind, etc) power plants of 1-5 MW capacity or more to serve the clusters and the immediate community.
  • Some of the current Industrial Development Centres (IDCs) under the management of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) are suitable and could be used as the launch pad for immediate take off of the Industrial/Cluster parks.
  • BANK OF INDUSTRY LIMITED
  • BOI was established in October 2001 following the reconstruction of the Nigerian Industrial Development Bank (NDIB) which had been in existence since 1964 as one of the oldest Development Finance Institution (DFI) in Nigeria.
  • BOI’s core mandate is the provision of financial assistance for the establishment of large medium and small projects, as well as the expansion, diversification and modernization of existing enterprises and rehabilitation of ailing industries.
  • The Bank’s vision is to be a leading self sustaining development finance institution operating under sound management and banking principles that would promote the emergence and development of a virile industrial sector in Nigeria.
  • The Bank’s mission is to transform Nigeria's industrial sector and integrate it into the global economy by providing finance and business support services to existing and new industries to attain modern capabilities to produce goods and services that are competitive in both domestic and external markets.
  • SHARE CAPITAL AND SHAREHOLDING STRUCTURE
  • Ministry of Finance Incorporated (MOFI) 58.86%
  • Central Bank of Nigeria 41.12%
  • Private Nigerians (42Nos) 0.02%
  • 100%PRODUCT OFFERING
  • Micro Enterprises & Cooperative loans.
  • Small and Medium Enterprises [SME Loans].
  • Large Enterprises [LE Big Ticket].
  • Leasing through Leasing Company of Nigeria (LECON)
  • Business Advisory, Investment and Trusteeship through BOI-Trust & Investment Company Ltd. (BOITC)
  • Insurance Brokerage Services through Industrial Development and Insurance Brokers (IDIB)
  • ROLE OF BOI IN SME FINANCINGOur effort towards equity and empowerment through lending and capacity building for sustainable inclusive development has since 2006 underpinned a paradigm shift in the bank’s strategic direction, orientation and mode of operation.Central to the Bank’s paradigm shift are:
  • Structured industrialization of the country through the stimulation and development of MSMEs which are widely recognised as the engine of economic growth, with higher developmental impact and multiplier effect per unit of investment; and consequently BOI’s commitment of 85% of its resources to MSMEs geared towards:
  • Expansion/diversification
  • Pro-employment
  • Local Raw Material Utilization
  • Export potentials
  • Encouraging the establishment of Industrial Parks in some states of the Federation purely on commercial terms to reduce the cost of doing business and promote cluster formation.
  • Establishment of a Gender Desk to cater for the special needs of Women Entrepreneurs.
  • MANAGED FUNDS
  • Nigerian Automotive Council Development Fund (NAC)
  • Rice Processing Fund
  • Cotton Textile and Garment Fund
  • Cement Fund
  • State’s Matching Funds
  • Sugar Fund
  • YOUWIN! Fund
  • BOI/Dangote Fund
  • MSME Development Fund in collaboration with State Governments.
  • Business Development Fund for Women (BUDFOW) managed for and on behalf of the Federal Ministry of Women Affairs & Youth Development.
  • Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)
  • FINANCIAL INCLUSION OF THE BOTTOM OF THE PYRAMID In continuation of its drive to deliver on its mandate, BOI has identified some gaps in term of funding, capacity building and mentoring amongst other challenges facing a segment of potential entrepreneurs who are either un-served or under-served vis-a-vis access to finance and other developmental support services. The Bank is therefore desirous of achieving financial inclusion by reaching out to this vulnerable Bottom of the Pyramid (BOP) group with a view to improving the quality of their lives. It therefore set up a dedicated micro credit fund (Bottom of the Pyramid Fund –BOPF) which is being on-lent through Microfinance Banks (MFBs) to deserving Micro-enterprises/entrepreneurs at the lower stratum of the economy.FINANCIAL INCLUSION OF THE BOTTOM OF THE PYRAMID (Cont’d)It is estimated that 70% of the Nigerian population regarded as the rural poor are at the Bottom of the Pyramid and they are largely engaged in subsistence farming and sedentary activities. It is this group at the BOP that BOI intends to serve in a new funding scheme in order to convert opportunities and potentials into realities. Addressing the funding gap of the Bottom of the Pyramid will also reinforce the Bank’s presence in the economic stratum.Activities to be Financed:These shall include but not limited to:
  • Value addition along all value chains in sectors like Agriculture,
  • solid minerals, etc
  • Trading in locally manufactured goods
  • Cottage Industries
  • Artisans
  • Services (Laundry, Restaurants, Bakeries, etc)
  • LIST OF DOCUMENTS REQUIRED FOR SME LOAN APPLICATION
  • Formal Application
  • Photocopy of Certificate of Incorporation (2 copies)
  • Certified true copy of Memorandum and Articles of Association (2 copies) and Form CO2 now C.A.C 2.5 (Allotment of Shares) and Form CO7 now C.A.C 2.3 (Particulars of Directors)
  • A photocopy of the filed Annual Returns (up to date) of the Company at Corporate Affairs Commission (CAC)
  • Feasibility Study Report (2 copies)
  • Land and Buildings Document:
  • Approved Site Plan and Title Deed (Certificate/Right of Occupancy) to the factory site (2 copies)
  • Architectural and Structural Drawings (for new buildings)
  • LIST OF DOCUMENTS REQUIRED FOR SME LOAN APPLICATION (cont’d)
  • Bills of Quantities or Contractor's Estimate of Construction costs (where applicable).
  • Valuation Report including List of Existing Assets (where applicable)
  • Quotations for the supply of items of Machinery and Equipment (one from the source used in the Feasibility Study Report and two from other sources, preferably from different countries)
  • Write-up on technology, manufacturing process(es), Technical Partners, if any, and where not detailed in the Feasibility Report
  • Sources and quotations for Raw Materials expressed in units
  • Eight(8) passport photographs of the Chief Promoter and two Directors of the company
  • A photocopy of the Current Tax Clearance Certificate of the Company and two of its Directors.
  • Photocopy of International Passport or Driver’s License of two (2) Directors of the Company
  • LIST OF DOCUMENTS REQUIRED FOR SME LOAN APPLICATION (cont’d)
  • The photocopy of the Title document to the factory site may be in form of:-
  • Deed of Conveyance
  • Certificate of Occupancy
  • Registered Deed of Assignment
  • Registered Deed of Lease or Sublease
  • Mining Lease, License, Test permit to blast and Approval of site plan from the Federal Ministry of Solid Minerals (where applicable)
  • NOTE: Item 13 (iii) & (iv) requires the submission of the original Head Document or Head lease respectively where applicable, for sighting at the first instance and to be submitted later. This is to determine the tenure of the lease or what has been assigned and to determine if the consent of the Head-lessor would be required before such document is assigned or transfer. The documents from 13(i) to (iii) should not be less than 25 years unexpired tenure in line with the Bank’s policy unless otherwise changed.LIST OF DOCUMENTS REQUIRED FOR LOAN APPLICATION SME(cont’d)
  • A copy of the draft Technical, Management, Machinery Supply and/or Joint Venture Agreement (where applicable).
  • Three years' Audited Statement of Accounts of the existing business (for expansion with new proposal).
  • Most current Management Accounts for one year or six months (for existing business).
  • Company’s Bank Statement for a period of one (1) year (for existing business).
  • Three years' Financial Statement of Accounts for Institutional Investors in the project or another company owned by the Chief Promoter (where applicable)
  • Declaration of Outstanding Liabilities to other Banks and Individuals
  • Evidence of availability of Collateral Security (e.g. landed property, Bank Guarantee, Shares Certificates in quoted companies, etc)
  • LIST OF DOCUMENTS REQUIRED FOR BUSINESS ENTERPRISE MICRO LOAN APPLICATION
  • Formal Application
  • Photocopy of Certificate of Registration (2 copies)
  • Business Plan (2 copies)
  • Quotations for the supply of items of Machinery and Equipment (one from the source used in the Business Plan and two from other sources).
  • Write-up on technology, manufacturing process(s), Technical Partners, if any, and where not detailed in the Business Plan.
  • Sources and quotations for Raw Materials expressed in units.
  • Eight(8) passport photographs of the Promoter (business owner)
  • A photocopy of the Current Tax Clearance Certificate of the Business Enterprise and the Promoter.
  • Photocopy of International Passport or Driver’s License or National Identity Card of the Promoter.
  • Detailed Profile of the Business Enterprise.
  • LIST OF DOCUMENTS REQUIRED FOR BUSINESS ENTERPRISE MICRO LOAN APPLICATION (CONT’D)11. Detailed Profile of the Business Owner and Key Management Staff (preferably Curriculum Vitae)12. Bank Statement of the Business Enterprise for a period of one (1) year (for existing business).13. Declaration of Outstanding Liabilities to other Banks and Individuals.14. Evidence of availability of Collateral Security (e.g. landed property, Bank Guarantee, Individual Guarantor etc). *********Individual Guarantor’s Requirements (Where Applicable)
  • Letter of Intent to guarantee
  • Means of identification in form of International Passport, National Driver’s License or National ID Card.
  • Eight (8) Passport Photograph
  • Recent Bank Account Statement for one (1) year
  • Tax Clearance Certificate
  • Profile of the Guarantor
  • LIST OF DOCUMENTS REQUIRED FOR A LIMITED LIABILITY COMPANY MICRO LOAN APPLICATION
  • Formal Application
  • Photocopy of Certificate of Incorporation (2 copies)
  • Certified true copy of Memorandum and Articles of Association (2 copies) and Form CO2 now C.A.C 2.5 (Allotment of Shares) and Form CO7 now C.A.C 2.3 (Particulars of Directors)
  • A photocopy of the filed Annual Returns (up to date) of the Company at Corporate Affairs Commission (CAC)
  • Feasibility Study Report (2 copies)
  • Quotations for the supply of items of Machinery and Equipment (one from the source used in the Feasibility Study Report and two from other sources, preferably from different countries)
  • Sources and quotations for Raw Materials expressed in units
  • Detailed Profile (preferably Curriculum Vitae) of the Directors and Key
  • Management Staff of the Company.
  • Eight(8) passport photographs of the Chief Promoter and two Directors of the company
  • A photocopy of the Current Tax Clearance Certificate of the Company and two of its Directors.
  • Photocopy of International Passport or Driver’s License of two (2) Directors of the Company
  • LIST OF DOCUMENTS REQUIRED FOR A LIMITED LIABILITY COMPANY MICRO LOAN APPLICATION (CONT’D)
  • Three years' Audited Statement of Accounts of the existing business (for expansion with new proposal).
  • Most current Management Accounts for one year or six months (for existing business).
  • Company’s Bank Statement for a period of one (1) year (for existing business).
  • Declaration of Outstanding Liabilities to other Banks and Individuals.
  • Evidence of filling appointment of Company’s Secretary with CAC.
  • Evidence of availability of Individual or Corporate Guarantor(s).
  • *********Individual Guarantor’s Requirements
  • Letter of Intent to guarantee
  • Means of Identification
  • Eight (8) Passport photograph
  • Recent bank account statement for one (1) year
  • Tax Clearance Certificate
  • Profile of the Guarantor
  • BANK OF INDUSTRY LOCATIONSThe Bank of Industry has its head office in Lagos and its corporate office in Abuja. THANK YOU FOR LISTENING
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