Issa Aremu
26 December 2011
analysis
Last week, Bank of Industry (BOI) carried out a number of activities to mark ten years of its restructured existence. The high point of the anniversary activities included the official opening of its office buildings in Abuja and Lagos.
The Abuja Corporate Headquarters of the Bank was on Thursday 22nd of December commissioned by President Goodluck E. Jonathan. Abuja commissioning coincided with a similar launch of the re-modelled head office in the commercial capital of Lagos.
Certainly the Bank is much older than its repositioned status date. BOI was reconstructed in 2001 out of the moribund Nigerian Industrial Development Bank (NIDB) Limited. NIDB was incorporated in 1964. It was part of the developmentalist Nigeria’s financial architecture of post independent Nigeria. When the history of Nigeria’s remarkable success story of the first two decades after independence is written, the role of old NIDB (with all its corporate governance fallings), through long term cheaper funding for industrial development must occupy a special chapter. It is right to say that BOI “is Nigeria’s oldest, largest and most successful development financing institution”. Its authorized share capital was initially set at N50 billion, but in the wake of NIDB’s restructuring into the current BOI in 2001, it has been increased to N250 billion to reposition the bank “to address the nation’s rising economic profile in line with its mandate”.
Following a successful institutional, operational and financial restructuring programme embarked upon in 2002, the bank “has transformed into an efficient, focused and profitable institution …well placed to effectively carry out its primary mandate of providing long term financing to the industrial sector of the Nigerian economy”. The strength of BOI is its activist corporate governance under the dynamic leadership of Ms Eveln N. Oputu, the Managing Director and Alhaji Abdulsamad Rabiu Chairman as well as upbeat executive directors like Mr. Mohammed G. Alkali and Mr.Chris. C. Umeh. With its formidable corporate team, BOI is truly re-industrializing the country just as the old NIDB industrialized hitherto agrarian Nigeria economy emerging from British colonial underdevelopment.
In 2007 the then Kaduna state deputy Governor, Mr Patrick Yakowa broke the industrial obituary news of the sudden demise of the largest textile mill in West Africa; United Nigeria Textile Company (UNTL) in Kaduna, a company with billion of Naira investment and thousands of employees. Many thanks to the resolve of the Vice President, Arc Namadi Sambo, and President Goodluck Jonathan’s administration finally endorsed the intervention fund under the cotton/textile revival plan.
The new deal supervised by Vice President Namadi Sambo is to revolutionize funding for the real sector and breadth life into the ailing industries. The deal worked out by the CBN and BOI covers lending and re-refinancing of projects, restructuring of existing portfolios to manufacturers and support for investment in industrial clusters power supply. The sudden “resurrection” (as it were), of UNT Plc. last year, after three years of closure (with close to 1,500 direct jobs currently) is premised on the realization of this cocktail of measures pushed by BOI, CBN and government. It can therefore be said that BOI in line with its motto; is “transforming Nigeria’s industrial sector”.
At the anniversary commissioning, Evenly Oputu, the Bank’s MD disclosed that in the last 10 years of its operations the Bank has approved 1,435 loans and investment totalling N165.74billion with considerable development impact on the Nigeria economy. According to her; “It is gratifying to note that in the last ten year BoI despite challenging environment, recorded appreciable stride in pursuit of its mandate and its evolution into a strong, dynamic and flexible development finance institution, DFI that proactively responds to the needs of entrepreneurs in Nigeria”. These achievements are indeed significant in a decade. But they all add up to a drop in the sea of industrial needs of Nigeria. With industry and manufacturing contributing miserably less than 4 per cent to the country’s GDP and with paucity of long term funding as one of the critical success factors, there is need to further elevate the BOI beyond ordinary.
Jonathan’s transformation agenda comes to grief without re-industrialization and after power supply (electricity) the most critical issue in re-industrialization is long term cheaper financing. The advantages of re- industrialization for Nigeria include lessening of dependency on imports, thus saving scarce foreign exchange. Where the economy is diversified, industrialization serves as a source of foreign exchange. It also serves as a source of mass sustainable decent employment for greater number of the population and invariably reduces income poverty. It is therefore refreshing that at the commissioning of BOI’s corporate head quarters, apparently determined to promote and fund Nigeria’s industrial sector, President Goodluck Jonathan rightly ordered the recapitalization of the Bank of Industry, BoI and directed that its equity be opened up to attract investors.
The President reportedly directed the Minister of Finance, Ngozi Okonjo-Iweala and the Central Bank of Nigeria, CBN Governor Lamido Sanusi Lamido to meet with the Minister of Trade and Investment, Olusegun Aganga with a view to coming up with modalities which would enable federal government increase the capital base of Bank of Industry. The sustainability of the reopened UNTL Kaduna for instance, and further reopening of others depends on the continuous commitment of governments through adequate funding of development banking institutions like BOI which of course must be complemented with other supportive and progressive policies such as drastic reduction in the incidence of smuggling.
The challenge is to make sure that Bank of Industry (BOI) is sufficiently financed to make cheaper funds available to industries that are willing to modernize with clear cut performance criteria that include labour absorption and job retention. National Assembly must therefore appropriate more funds for the Bank. The existing commercial banks’ short term funds with high interest rates make industry non-competitive. UNIDO has shown that high cost of borrowing in Nigeria increases working capital costs compared to other countries and that this is a major international cost disadvantage for producers in Nigeria.
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