The Bank of Industry (BoI) is to disburse the $750 million (N250 billion) syndicated loan facility extended to it by the African Export-Import Bank (Afreximbank) to Micro, Small and Medium Enterprises (MSMEs) at single digit interest rate.
Afreximbank had at the conclusion of its annual meetings and 25th anniversary celebrations in Abuja, weekend extended the $750 million for on-lending to MSMEs.
The BoI Managing Director, Mr Olukayode Pitan, who spoke in an interview on the sidelines of the signing of the MoU between his bank and Afreximbank,
said the loan would be given to MSMEs in the country for a period of between five and seven years.
The facility, he added, would enable the bank bridge the funding gap for MSMEs which he estimated at about N700 billion.
Pitan explained that the $750 million (N250bn) is the single largest syndicated facility to be received by a development finance institution in Nigeria, adding that a total of 16 banks financed the deal. Some of the banks provided the fund are Africa Export-Import Bank, ECOWAS Bank for Investment and Development, and British Arab Commercial Bank Plc, among others.
He said, “There were 16 international banks that took park; our Nigerian banks that are based in the UK were a part of it. This money is medium term, which is three years and the interest is very good when you look at the rate Nigeria usually borrows.
“The idea is to support industries. What this loan allows us to do is, it gives additional N250 billion depending on the exchange rate that is used (between N230bn and N250bn) to deploy to the industrial sector.
“We have done our own study. There is a gap in the funding of the industrial sector to the tune of N704 billion. This is our way to reduce that gap,” Pitan said.
He stressed that the fund would be given to companies operating in the creative industry, manufacturing and gender-based businesses.
This, he noted, would help reduce the unemployment rate in the country and create wealth for small and medium scale entrepreneurs. He said, “We are looking at small, medium and large enterprises. We are looking at enterprises or companies that have a focus in using local raw materials, companies that generate employment and bring down their cost of borrowing.
“This loan will be deployed at less than ten per cent interest per annum. We are looking at the creative industry, light manufacturing, mining, gender business etc to promote Nigerian industrial sector,” Pitan said.
According to him, BoI is working with the Central Bank of Nigeria to ensure that the loan it will give to Nigerian businesses will be a longer-term loan of between seven to eight years, for the industrial sector,” he added.