Presentation to FATE Alumni business men and women on the 10th f March on Business Financing Programmes by the Bank of Industry

1. FINANCING OPPORTUNITIES FOR NIGERIAN MSMEs
PRESENTATION BY
ABDUL-GANIYU MOHAMMED,
DIVISIONAL HEAD, SME – SOUTH
BANK OF INDUSTRY
AT
The FATE Foundation's March Alumni Knowledge Building
Programme
Thursday, March 10, 2016

2. 2
Overview of the Nigerian Economy
• Largely a middle income, mixed economy and an emerging market.
• Expanding financial service, communications, technology and
entertainment sectors.
• Currently the largest economy in Africa with total GDP of $510 billion as at
2013.
• Impressive growth over the past decade with a record estimated 7.4%
growth of GDP in 2013
• Experiencing high unemployment rate and poor income distribution
• Hosts a huge spectrum of suitable agro-climatic conditions that allow a
broad range of diverse agricultural production. However still importing large
quantities of agricultural / food products.
• The employment base of the Nigeria economy is largely dependent on the
agricultural sector

3. Overview of MSME in Nigeria
• Size of SMEs 37million (Micro-36.99m, Small- 68,168, and Medium-4,670). They are mainly
sole proprietorships. 55% of SMEs are wholesale and retail trades.
• State
Distribution
Lagos state has the highest number of SMEs (11,663), while Kwara State has the
least (226). Lagos State also has the highest number of micro enterprises
(3,224,324), followed by Oyo State (1,864,954), then Kano State (1,794,358).
While the FCT (482,365) and Nasarawa State (382,086) recorded the least.
• Labour Force The total number of persons employed by the MSME sector as at December,
2013 stood at 59.7million, representing 84.02% of the total national labour
force.
• Gender size Female entrepreneurs accounted for 43.32% in the ownership structure of
micro enterprises as against 22.75% in small and medium enterprises.
• Literacy level The level of education is very low. 51% of the SMEs have no education
• Age The ownership structure by age showed that the age bracket of 24-50
dominates. Hence youth entrepreneurs are dominant.
• GDP & Export Contribution to GDP in nominal terms stood at 48.47%.
Contribution to export quite low, stood at 7.27% because the products fall
short of standards and as such, cannot access international market

4. Importance of MSMEs
Engine of Growth
 The sector is the largest provider of employment in most countries,
especially of new jobs.
 MSMEs are a major source of technological innovation and new products
 A major contributor to the Gross Domestic Product (GDP)
Poverty Reduction
 MSMEs tend to employ poor and low-income workers
 MSMEs are sometimes the only source of employment in poor regions and
rural areas
 Self-employment is the only source of income for many poor
 MSMEs play a particularly important role in developing countries where
poverty is most severe
Essential for a Competitive and Efficient Market
 Ensure none of the participants have significant market control
because of a large number of players
 Competitive markets achieve an efficient allocation of resources
Particularly Important Role in Developing Countries
 MSMEs can be used as a tool for political stability
 MSMEs as a tool for financial inclusion
 MSMEs as a tool to curb or reduce social vices to a manageable proportion
 MSMEs as a tool to grow government tax base

5. Underlying Challenges in MSME Financing

6. 6
Tackling the Underlying Challenges
 Hence, lending models developed for stable markets with reliable
documentation cannot be applied to largely informal SME businesses.
 MSMEs clearly require flexible and tailor made loans while effective support
must go beyond funding and short-term advisory.
 These are the underlying reasons for the strategic positioning taken by BOI
in recent past which include:
• Expanding the reach to the micro enterprises through an on-lending
scheme with Microfinance Banks (MFBs).
• Integrating capacity building into financing for MSMEs
• Cluster based lending approach
• Innovative financing.
• Creative support mechanism including digital offerings
• Exploring alternative mechanisms like venture capital and value chain.

7. Introducing BOI
• Set up in October, 2001
• This followed the reconstruction
of the former NIDB to include the
mandates of NERFUND and
NBCI
• The defunct NIDB has been in
existence since 1964.
• The setting up of Bank of
Industry (BOI) is the
Government strategy of
achieving self sustaining growth
in the context of globalization.
• BOI is determined to ensure
optimal utilisation of Nigeria vast
resources and potentials

8. 8
Bank of Industry (BOI)
– Mandate
• The potentials of BOI will be better appreciated in the context of its
primary mandate and it’s expected role in the implementation of
the Federal Government’s industrial and economic programmes.
• The mandate of BOI is to provide Financial assistance for the
establishment of large, medium and small scale companies as well
as the expansion, diversification and modernization of existing
enterprises and the rehabilitation of ailing industries
• It was conceived as a catalyst in transforming the real and
emerging sector of the Nigerian economy by providing financing
and business support services to entrepreneurs especially MSMEs
with strong potentials for employment generation and export.

9. The Vision
9
BOI’s vision is to be Africa’s leading
Finance Institution operating under global best
practices.
The Bank’s mission is to transform Nigeria’s
industrial sector by providing financial and
support services to enterprises.
To achieve this, BOI is setting out to make
impacts by ensuring that the enterprises being
financed are not only sustainable but also
sustainable environments.

11. 11
Tapping the BOI potentials
• The Bank has been charged with the responsibility of providing fund for
the successful implementation of Government’s industrial programmes.
• The choice of BOI to carry out this task is based on its role as a
Development Finance Institution (DFI);
i) Provision of Long-Term Fund: up to 3-15 years including moratorium
of 1-4 years depending on the source/line of credit.
ii) Concessionary Interest rates: ranging from 4-10% depending on the
line of credit.
iii) Provision of Advisory Services: Business advisory and capacity
building services.
iv) Benefits of partnership with various stakeholders: leveraging on its
partnership (e.g UNIDO, AfDB, Afrexim, AFC, British Council, CBN, FMA&RD,
State Governments, Dangote Foundation, EDCs, etc.) to assist its customers
in capacity building and in securing credit facilities at concessionary terms.

12. 12
Exploring the opportunities
Rendering creative solutions & creative
financing
•Cluster based financing in line with
Commodity based industrialisation
•Increasing Funding base
•SME Consultants (BDSPs)
•Digital offerings: SME Accounting App,
Online Loan Application Portal, SME Mobile
App, Customer Portal
•SME Auditors
•SME Estate Valuers,
etc

14. Introducing BOI
PRODUCTS & SERVICES
Short, Medium and Long-Term Financing
Cluster lending through Product Programs
Equity Financing
Co-Financing/Syndication
International Operations/Trade Services
Management of specialised Funds
Other complimentary services rendered by BOI’s
Subsidiaries: Microfinancing, Leasing, Trusteeship,
Insurance Brokerage, Consultancy, etc.

15. 15
3 Easy Steps to Accessing
BOI Fund
1. Formal Application Letter
2. Completion of BOI’s Questionnaire
3. Submission of BOI’s Checklist items and
Questionnaire at any of the Bank’s offices
nationwide
Or
 Meet with any of our accredited BDSPs
(www.boi.ng/bdsp)
 Apply online at www.boi.ng/apply

16. 16
BOI Checklist Items (Summarized)
• Copy of Certificate of Registration, Certified True Copy of
Memorandum and Articles of Association of the Company, Form
C02 and Form C07
• Three (3) years most recent Audited Accounts of the company (as
applicable)
• Land and building documents: Certificate of Occupancy
(Satisfactory tenancy agreement long enough to cover the tenure
of BOI’s facility, in respect of rented property).
• Quotations for items of plant and machinery.
• Quotations for items of raw materials.
• Three (3) years most recent Tax Clearance Certificate for the
Company and two (2) Directors.
• Eight recent Passport photographs of each of the two Directors
and the Company Secretary.
• Photocopy of international passports or drivers license of two (2)
Directors.

18. A. Are you a Nigerian Entrepreneur?
B. Can you provide at least 20% equity for your project?
C. Do you have sufficient industry knowledge, skills and experience related
to your business?
D. Are you prudent and financially disciplined and able to separate personal
funds from business funds?
E. Are you passionate, energetic and resilient in the face of challenges and
unafraid of competition?
F. Have you attended an entrepreneurial development program at any of our
accredited EDCs – www.boi.ng/EDCs
G. Is your company set up to run effectively even in your absence?
H. Does your company fall within BOI’s definition of SMEs as indicated on
our website (www.boi.ng/smedefinition)?
I. Has your company been in operation for a minimum of 3 years with a
good track record of sales and profit margin?
J. Is the loan purpose clear, specific and verifiable?
K. Does your company have a viable and realistic growth plan?
L. Are you or your company able to provide collateral in the form of Bank
Guarantee or Legal Mortgage or verifiable streams of receivables
from well rated entities?
M. Neither you or your company has a history of loan default.

19. N. Does your company keep accurate and complete records of its operations, both
accounting and non-accounting?
O. Does your company have a skilled, motivated and dedicated workforce?
P. Is your company in close proximity to reliable sources of raw materials?
Q. Does your company have a strong demand for its products from a loyal customer
base?
R. Does your company have all the licenses and permits required for its operations.
S. Does your company operate in Nigeria’s agricultural or manufacturing value chains
or related service sector?
T. Are the project and other collateral assets within safe and secure locations?
U. Is the technology employed tested, reliable and efficient with medium to long-term
maintenance agreements and performance guarantees from the equipment
suppliers.
V. Is your company a member of relevant Organized Private Sector (OPS)
Associations – MAN, NASSI, NASSI and NASME.
W. Are you and your company up to date in meeting Personal and Income Tax
obligations respectively?
X. Can your company generate sufficient cashflow to fully repay the loan?
Y. Is your company engaged in activities that are legally permissible?
Z. Do you undertake to make full and accurate disclosures to BOI concerning the loan
application.

20. Thank you