By Olukayode Pitan, Managing Director and Chief Executive Officer, Bank of Industry
At Bank of Industry (BOI), we are fully committed to transforming Nigeria’s industrial sector by providing financial assistance to enterprises of all sizes. Our business model cuts across micro, small, medium and large business segments, and we leverage both direct and indirect lending models to support these business groups in a bid to spread our reach.
For large enterprises and SMEs (small and medium-sized enterprises), the bank leverages its head and corporate offices in Lagos and Abuja, respectively, as well as 30 offices in 29 states across the country. This is supplemented by our on-lending partnerships with various commercial and microfinance banks, as they have a large footprint and enable us to spread our reach even wider. Microenterprises, on the other hand, are served indirectly through microfinance banks and other non-banking financial institutions, as these institutions have the necessary platforms to access and adequately manage these types of customers.
Our strategic partnerships and our unwavering support for enterprises throughout the country have been pivotal to our long-term success. A prime example can be found in the Federal Government of Nigeria’s (FGN’s) social-intervention programme—Government Enterprise and Empowerment Programme (GEEP)—that targets market women and artisans, amongst others, and for which BOI was the implementing agent. This programme supported 2.9 million microenterprises, a significant portion of these beneficiaries are women.
Microfinance represents a crucial component of the bank’s overall business model, with our subsidiary, BOI Microfinance Bank Nigeria (BOI-MFB), highly active in coaching and hand-holding micro-entrepreneurs during the loan evaluation, approval and monitoring process. We also organise multiple events, such as seminars and mentorships, that are laser-focused on improving business skills and know-how for our micro-entreprise customers. BOI-MFB is able to leverage its parent company’s unparalleled reputation and presence in the local market to gain visibility within the microbusiness ecosystem.
Other projects executed on behalf of the federal government include N-Power, which supports youth entrepreneurs, and the MSME Survival Fund, which was introduced in response to the hardships experienced by businesses at the peak of the COVID-19 pandemic. The scheme was created as a component of the National Social Investment Program to provide a structure for large-scale and relevant work-skills acquisition and development and ensure that each participant will learn and practice most of what is necessary to find or create work. N-Power has already provided funding worth ₦29.9 billion and has supported a total of 500,000 youths to date, while the MSME Survival fund has disbursed ₦65.2 billion to 1,189,088 beneficiaries.
Then there is the BOI Agro Value Chain Finance (AVCF), which is designed to support small-holder farmers. We have managed to partner with aggregators to reach more than 50,000 farmers thus far and disbursed a total of ₦8.5 billion of funding. These entities operate as key intermediaries for facilitating on-lending of BOI loans to farmers as well as guaranteeing off-takers for their produce and providing a range of additional support services. And the BOI North-East Rehabilitation Fund (NERF) supports the revitalisation of business and economic activities in the country’s North East region. It has disbursed ₦569.3 million, supported 56,934 beneficiaries and trained more than 6,000 female beneficiaries through NGOs (non-governmental organisations) in skills acquisition and financial literacy to allow them to utilise the facility efficiently.
Innovation plays a fundamental role in supporting businesses efficiently, particularly those that require the most assistance. Our financial-inclusion scheme, for example, represents one of our cutting-edge solutions. It leverages our proprietary electronic platform, Growth Platform, which facilitates credit delivery to underserved and underbanked micro-entrepreneurs. All of our loan-appraisal, -approval and -disbursement processes can be carried out in as little as one day. Through this platform, we have also been able to execute various social-intervention programmes on behalf of the federal government, such as GEEP, the FGN’s MSME Survival Fund initiative and the BOI North-East Rehabilitation Fund. The GEEP MarketMoni programme offers interest-free microloans targeted at informal micro-entrepreneurs, artisans, market traders and so on, aiming to alleviate poverty through job and wealth creation. It focuses on rural micro-enterprise operators, extending financial inclusion to them.
But, of course, it would be remiss of us not to highlight the massive impact that the COVID-19 pandemic has had in irrevocably changing the way businesses operate, not just in Nigeria but all over the world. In the food industry, issues such as supply-chain disruptions, increases in the prices of inputs, closures of food-production facilities, restricted movements of workers and raw materials, and wastage of food products from farm to table have all adversely impacted the sector. According to Nigeria’s National Bureau of Statistics, food inflation was highest in the first quarter of last year but has gradually declined over the period (May 2021 at 22.95 percent compared to May 2022 at 17.20 percent).
For all our customers, including those operating in the food industry, the bank reduced the interest rates on loans by 2 percent from April 1, 2020, onwards. Initially set to last for one year, this discounted rate remains in place to this day and will continue until at least March 31, 2023. We have also extended the moratorium on loan-principal repayments by three months while ensuring that principal repayments are not required to commence until customer equipment has been commissioned. For example, a customer who receives equipment finance for a cereal-processing plant will not commence principal repayments until the equipment has been delivered, even if it takes six months to procure the equipment. In 2020, such a customer enjoyed another three months of additional moratorium following the commissioning of the plant.
The pandemic has also ushered in important changes to our banking culture and daily operations. The initial outbreak of the virus saw the government implement important mechanisms to curb its spread, such as lockdowns and social distancing, that could have seriously impacted the business. As such, we activated the Business Continuity Plan (BCP) in a bid to ensure that the customer experience was not significantly disrupted. Thankfully, we had already embarked on a re-engineering process and a comprehensive IT (information technology) infrastructure project to overhaul our systems to ensure efficiency and better customer experience back in 2019, before the pandemic outbreak. These projects proved crucial in enabling our staff to transition to remote-working environments seamlessly in March 2020.
We also upgraded our digital-learning platform to provide all staff with on-demand training resources across various fields and modules, equipping them with sufficient skills to continue meeting customers’ evolving needs. And given that all our engagements with customers and strategic partners were conducted virtually during these difficult periods of the pandemic, we ensured that our customers’ digital touchpoints were upgraded and operated in optimal condition. Social-media channels and digital capabilities were also fully operational to support customers during this challenging period.
Today, we continue with a flexible working policy, although most of our staff have resumed working from the office, thanks to the steady reduction in infections due to the vaccination drive across the country. That said, the last 18 months or so have seen considerable work being carried out within all of our offices to ensure adequate social-distancing measures and other health-and-safety requirements triggered by the pandemic are maintained.
Nonetheless, we fully recognise that “business as usual” as it was in the pre-pandemic days is now firmly a thing of the past and that businesses today—banks included—cannot afford to conduct their business activities in the same manner. As we move into the post-pandemic era, it is important to note that we will not fully revert to our old ways. It has thus become the norm to supplement our physical customer visits with virtual meetings and monitoring—this is already proving to be a more effective and efficient mode of client management as challenges are resolved in a timely manner, and our stakeholders can address all outstanding issues without having to overcome travel issues. Indeed, the pandemic did generate a few positives, as customers—and the general public at large—have been forced to embrace technology more willingly. At BOI, we are thus taking advantage of this shift to serve customers better through our virtual platforms rather than simply at our physical branches.
Towards supporting the dire need to address the rising unemployment situation in the country, one of the fundamental metric we leverage in our evaluation of credit applications from customers is job creation potential of such projects. As a result, enterprises seeking finance from the bank must demonstrate the potential they possess to generate jobs and reduce the unemployment rate in the country. Indeed, being a government-owned agency, BOI has a crucial responsibility to contribute positively towards achieving the FGN’s job-creation target. Between 2015 and 2021, we contributed more than nine million direct and indirect jobs to the Nigerian economy through our support for large, medium, small and micro-enterprises.
Indeed, our international lending partnerships have enabled us to provide relatively lower interest rate on loans to our customers. The Eurobond transaction, however, represents a particularly historic achievement for the bank—not only is it the first of its kind for BOI, but it is also the first successful Eurobond debt-raising by any national development finance institution (DFI) in Africa. The deal required about two years’ worth of preparation and involved a number of key lending institutions, including African Export-Import Bank (Afreximbank), Africa Finance Corporation (AFC), Citigroup and Rand Merchant Bank (RMB), who acted as Joint Global Coordinators and Joint Book runners. Mashreq and Sumitomo Mitsui Banking Corporation (SMBC) also participated as Joint Lead Managers and Joint Book runners.
Most importantly, such funds helps to bolster the capacity of BOI to effectively support micro, small, medium and large enterprises across key sectors of the Nigerian economy, allowing us to continue providing affordable loans of medium to long-term tenor alongside moratorium benefits. As such, improve our capacity to support the revitalisation of Nigeria’s industrial sector. With the African Continental Free Trade Agreement (AfCFTA) now active, we have a major role to play in providing the necessary support to Nigerian enterprises, thus helping to be a positive driver of free trade throughout the continent. I am quite confident that we will continue to strengthen both our processes and capacity to deal effectively and efficiently with the tasks ahead.