The African industrialisation narrative is unique

The Bank of Industry (BOI) is Nigeria’s oldest and largest development bank. Its mandate is to support Nigerian industry and enterprise, especially the MSME segment. Given the perilous situation brought about by the Covid-19 imposed lockdowns and the severe economic attrition that followed, the bank immediately put into place a series of measures to mitigate against the fallout. BOI also made history by becoming the first African national Development Finance Institution (DFI) to issue a Eurobond. The complexity of this deal was such that it won the African Banker Deal of the Year (Debt) Award for the bank. African Banker Editor Anver Versi is in conversation with Olukayode Pitan

(right), who has led the bank’s impressive performance over the last five years Congratulations on being appointed by HE Muhammadu Buhari, the President of Nigeria, for another five-year term as head of one of the most important financial institutions in Nigeria. What do you see as your immediate priority in terms of rebooting the economy?

Thank you very much. I am indeed honoured to have been re-appointed for another five-year term by HE President Muhammadu Buhari. Over the past five years, the bank has achieved tremendous progress across its developmental objectives in order to support the sustainable growth of Nigeria’s industrial sector.

While it was a robust bank when I assumed office in 2017, I believe that we have made the bank stronger in terms of developmental impact, technology deployment, human capital and corporate governance, as well as financials.

We intend to build further on all of these parameters. We want to further strengthen our balance sheet, expand the range and depth of support we provide to enterprises, and facilitate the continuous growth and development of priority and emerging sectors that were identified in the President’s National Development Plan. What has been the impact of the Covidgenerated shutdown on your bank’s performance in terms of profitability?

The Covid-19 pandemic had a significant impact on businesses and livelihoods globally, Nigeria inclusive. Many businesses had to deal with reduced revenues and profit margins due to the associated challenges occasioned by lockdown towards managing the spread of the virus. Our customers were not spared this reality.

In response to this situation, the bank immediately implemented various measures – such as the reduction of interest rates, the extension of moratorium, and the restructuring of loans for specific industries – to ensure that our customers were able to keep their businesses afloat.

We introduced a 2% reduction in the interest rate on loans to our customers in April 2020 and have since extended it annually until 31 March 2023. These measures were impactful as they ensured that our customers were able to lower their cost of financing, service their loans and keep their businesses afloat.

We also worked to increase our disbursement to eligible businesses during the period. I am happy to tell you our response allowed us to remain profitable

“Financial institutions must begin to view MSMEs as a viable business segment that can offer them profitability”

as the bank’s profit increased by 15% from about $93.7m in 2020 to $109.3m in 2021. Congratulations again on winning the African Banker Deal of the Year (Debt) Award. What were the special challenges you had to overcome to complete this deal?

Thank you. This award was in respect of our debut €750m senior note Eurobond transaction (the first by any African national DFI) in February 2022.

With respect to specific challenges, I would say the most critical challenge we had to overcome was in relation to the novelty of this deal. This deal was the first time we explored the issuance of a Eurobond as a way to raise capital, and as such, some experiences that we had to contend with were new to us.

We had to work through several levels of the Nigerian government, from both the legislative and executive arms of the government, which came with various hurdles and challenges. But I am delighted with the support we received through the process.

With the closure of this transaction, we believe that we are now more experienced and trust in our ability to be more efficient in future transactions of this kind. Your bank was called upon by the government to initiate several social investment programmes to help the country cope with the effects of the pandemic. Are you scaling these down now or maintaining the momentum?

The Bank of Industry has a long-standing strategic partnership with the Federal Government (FG). We were the implementing agency of the FG’s Government Enterprise Empowerment Programme (GEEP) as well as the N-Power programme – both are social investment programmes that were launched in 2015. They were designed to support different segments at the lower end of Nigerian society, especially women and young people.

On the back of the successes of these social investment programmes, we were subsequently appointed as the managing partner of the FG’s 75bn MSME Survival fund, a programme that was introduced in 2020 to assist businesses to mitigate the shocks of the Covid-19 pandemic.

As of June 2022, over 4.5m beneficiaries have been supported through the above programmes. Approximately 60% of the beneficiaries are women.

These social investment programmes are very important in the Federal Government’s quest to empower small businesses, the youth and also to alleviate poverty in our country. Therefore, we are revving the momentum and engaging various agencies and departments of government towards making these initia