Mr. Olukayode Pitan, Managing Director, Bank of Industry

BY EMEKA EJERE

The Bank of Industry (BOI) last week reassured beneficiaries of its 2019 credit facilities that it is not unmindful of their predicament occasioned by the Coronavirus pandemic, which has left many businesses groaning. Since its change from NIDB, Nigerian Industrial Development Bank,  to BOI 19 years ago, it has through its various intervention funds made a tremendous developmental impact in the country’s industrial landscape.

The global pandemic which has so far affected about 34 states of the federation and the Federal Capital Territory had led to an unprecedented drop in global crude oil prices, thereby worsening the nation’s foreign exchange quagmire.

To contain the spread of the disease, a total lockdown was ordered by President Muhammadu Buhari, first, in Lagos State, Ogun State as well as the Federal Capital Territory and later extended to Kano State.

In complementing the effort of the federal government, other state governments also announced a curfew in their states. The cumulative effect of all the restrictions led to a state of inactivity in the economy, with many businesses and households recording declining or no income.

There is no doubt that many of the over 10,000 enterprises that benefited from the BOI’s N234 billion disbursements in 2019, must have been wondering if the support was a blessing or a curse. With the shrinking demand for goods and services, some of them must have wondered how they would service their debts, or even stay afloat in a raging economic storm.

But the bank says it has not been unmindful of their fears. In a statement last week, BOI noted, “The COVID-19 pandemic is a clear and present danger to the world, especially the developing nations like Nigeria from a health as well as an economic perspective.

“BOI understands that these are very challenging times for all Nigerians, including our dear customers and it has been working tirelessly to provide the critical support required by our customers not only to survive but to thrive in these difficult times.”

The Bank moved quickly to implement measures in compliance with the federal government’s directives on moratoriums for loans given by government-owned financial institutions, while also implementing its measures to ensure that customers are well-supported in line with its developmental mandate.

It will be recalled that President Muhammadu Buhari had in his nationwide address on March 29, announced palliatives for the economic effects of the COVID-19 pandemic. The bank said it promptly responded to the presidential directive in several ways.

Accordingly, the bank communicated the moratorium period of three months to customers and further advised that customers requiring more than three months can apply for a further extension, which can be up to 12 months. Also communicated to the customers and partnering commercial banks is the reduction of the interest rates on all BOI-funded projects by two per cent per annum from 10 per cent to 8 per cent with effect from April 1.

Besides, BOI has worked with its funding partners to obtain interest rate reductions on some of the funds that it manages. In particular, the bank worked with the Nigerian Content Development Management Board to reduce the interest rates on credit facilities approved under its managed fund from eight per cent per annum to six per cent per annum.

The bank said further, “All intervention funds granted by the Central Bank of Nigeria and disbursed by the Bank of Industry have been covered by the CBN’s palliative measures, which include moratorium extension and interest rate reduction to five per cent per annum, which has also been communicated to the relevant customers.

“The bank has written to all the managing directors and chief risk officers of partnering commercial banks, officially notifying them of the bank’s position on these initiatives.

Also, in a bid to support the government and private sector initiatives to fight COVID-19, BOI donated N700m to the CACOVID Fund, as well as the Lagos State Government and the FCT Ministerial Committee on COVID-19

Although the bank ended the 2019 financial year strongly to the delight of shareholders and other stakeholders, the socio-economic headwinds from COVID-19 put its reputation at stake. It had no choice but to show it had a responsibility to its customers as much as it cares about its income figures and shareholder interests.

It is more so as the bank has a mandate of providing financial assistance for the establishment of large, medium and small enterprises; as well as expansion, diversification and modernization of existing enterprises and rehabilitation of ailing industries

An official of the bank said recently, “We don’t just provide loans; we work continuously with our customers to ensure that they succeed. We provide business advisory services other than just providing loans; and we continuously engage our customers, especially during difficult times.

“We are always conscious of our reputation as Nigeria’s oldest, largest and most successful development financing institution. Among our operational principles are long-term relationship with clients, based on shared responsibilities for the success of enterprises; and equitable commitment to the prosperity of all stakeholders.”

In line with its vision to operate under global best practices, BOI has been benchmarking itself against top-notch development financing institutions (DFIs) in Africa, Asia, South America and Europe; and it has continuously obtained favourable credit ratings from world-class credit rating agencies

Its Total Equity for the year ended 2019 was N293.09billion showing a 13.4 per cent increase over 2018 position of N258.24 billion. In the same vein, Profit Before Tax (PBT) of the group grew to N39.33 billion marking a year-on-year growth of 7.2 per cent over N36.66 billion of 2018.

According to the DFI, the increase in profitability is as a result of improvement in loan book, as well as the efficient management of the group’s other assets and liabilities. Despite a slow start in the first quarter of the year due to the build-up to the 2019 general elections, loans and advances grew by 16.7 per cent from N634.11billion in 2018 to N740.03 billion in 2019.

Interest Income and Interest Expense increased by 20 per cent and 54 per cent on a year-on-year basis respectively due to an increase in loan book as well as the impact of borrowings.

The accounts of the Bank of Industry group reflects a strong balance sheet as well as sustained business growth in line with regulatory requirements and global best practices; as well as a strong alignment with the strategic objectives of the Federal Government, especially in the areas of industrial growth and job creation.

The bank disbursed a total of N234 billion to 10,145 enterprises, thus facilitating the creating of an estimated one million direct and indirect jobs. The disbursement to the Micro, Small and Medium Enterprises (MSME) segment increased from N33.9 billion in 2018 to N53.0 billion in 2019, representing a remarkable 56.3 per cent year-on-year growth.

The Bank also consolidated its role as the managing partner of one of the federal government’s Social Investment Programmes, Government Enterprise and Empowerment Programme (GEEP).

About N8.2 billion was disbursed to beneficiaries in 2019, thus bringing the total disbursed amount since inception to N36.9 billion to 2.3 million beneficiaries nationwide. In light of this outstanding performance, GEEP was recognised by the Desmond Tutu Fellowship for its role in driving financial inclusion. The programme also won the African Development Bank’s African Bankers’ Award as the most impactful Financial Inclusion programme in Africa.

Fund Mobilisation.

To enhance its support to the industrial sector of the economy for growth, the BOI continues to improve its capital base through facilities from reputable sources. In 2019, the bank initiated discussions with international strategic partners towards raising funds to boost its operations. This transaction was concluded in March 2020.

The sum of €1 billion (approximately $1.11billion) was raised through a Syndicated Guaranteed Senior Loan Facility from 24 international financial institutions.

The success of this transaction is to enable the Bank to catalyse domestic production and job creation on a transformational scale, enhance local industry competitiveness, attract domestic and foreign investments, integrate local industries into domestic, regional and global value chains, grow export earnings and positively impact the overall economic development of the country.

In September 2018, the bank signed a Memorandum of Understanding with the Export-Import Bank of China (CEXIM) for a $500 million line of finance. The tenor is expected to be for five to six years.