Of BoI and Economic Diversification Crusoe Osagie
Presents the need for a diversified Nigerian economy and the development financing role, which the Bank of Industry has played in keeping industries afloat
The need to diversify the Nigerian economy has been a topic of discussion in the country’s economic space for the past two decades. It has come in the form of warnings from multilateral institutions and the global economic community as well as local experts.
The ongoing economic crunch, which the nation now grapples with has however come to confirm the fears that many have nursed concerning to unsustainability of the Nigerian economy.
For some experts, Nigerians must be thankful that certain steps had already been taken by the federal government and the current managers of the economy, before the sharp decline in crude oil price, which has resulted in a hemorrhage economy and a currency that has lost almost 40 per cent of its value in the last four months or so.
Imagine if Nigeria was still spending one billion Naira daily to import rice to feed her teeming population; that amount would have almost doubled by now, with the Naira exchanging for between N200 and N230 to a Dollar in the official and parallel markets.
Imagine if the annual fish importation bill, wheat importation bill, motor vehicles importation bill, fertiliser importation bill, electric cable importation bill, iron rods and corrugated sheets importation bill, vegetable oil importation bill, among several others which have all declined in the past four years, had remained what they used to be, the nation’s economy might have been shutting down by now.
Although what has already been achieved in the task of ending Nigeria’s import dependence and enhancing the nation’s capacity to conserve foreign exchange is more or less scratching the surface compared to what is possible, successive governments in the past all failed to take even these essential baby steps. BoI Financing Real Sector To achieve the improvement in local manufacturing and real economic development across the varied sectors mentioned above and more, development financing has played a significant role and the Bank of Industry (BoI) has been in the forefront of promoting local enterprise for the benefit of the entire economy.
Managing Director, BOI, Mr. Rasheed Olaoluwa, recently noted, during a tour of factories that benefitted from the agency’s financing that the effective implementation of the industrial policy to support local manufacturing is the way to go in creating employment opportunities for the nation’s teeming unemployed youths as well as achieving economic growth.
The BOI, through the supervision of the Federal Ministry of Trade and Investment, has attempted several rescue missions in the nation’s economy.
It has so far disbursed N517 billion to key sectors of the economy under the federal government’s intervention programme with most of these funds released to operators in the last four years.
Some of the sectors where interventions have been made are manufacturing power; aviation; cotton; textile and garment; agriculture; automotive industry and cement.
These interventions have helped to provide financial assistance for the establishment of large, medium and small projects as well as expansion, diversification and modernisation of existing enterprises; and rehabilitation of ailing industries.
BoI said the government in the last few years had been very proactive in the area of addressing the dearth of long term investible funds required by the manufacturing sector.
“There are several sector-specific intervention funds and schemes in Nigeria today more than ever before in the history of our nation,” it said.
A breakdown of the interventions shows that out of the N235 billion Central Bank of Nigeria’s Refinancing/Restructuring Fund of commercial banks loans to the manufacturing sector, about N229.18 billion had been disbursed as of the end of the first quarter of 2013 with over 525 companies benefiting from the scheme.
For the N300 billion Power and Aviation Fund, which was established to fast-track the development of the aviation sector by improving the terms of credit to airlines, the bank said about N208.21 billion had so far been disbursed.
On the federal government’s N100 billion Cotton Textile and Garment Development Scheme for the revival of the ailing CTG sector, BoI said over N60 billion had been committed to 52 companies in the sector.
As for the federal government’s N10 billion Rice Intervention Fund; most of it has been disbursed.
The fund, which was initially designed to assist 10 pre-qualified companies to set up 17 model rice processing mills in the country, had been used to establish four rice mills, it stated.
It said N8.39 billion had already been disbursed from the National Automotive Council Fund in respect of which BoI received N16.9 billion. BoI Needs Partners Apparently aware of the state of the nation’s industrial sector prior to his appointment, Olaoluwa, has since stated that the task of increasing the contribution of the manufacturing sector to Nigeria’s Gross Domestic Product cannot be undertaken by BOI alone. According to him, for the bank to effectively deliver on its mandate, the institution would have to work closely with other relevant stakeholders towards addressing the non-financial issues facing the manufacturing sector and micro, small and medium enterprises.
The new chief executive added that urgent steps would have to be taken to improve on BOI’s service delivery to enable it meet the unemployment challenges facing the country especially in the areas of wealth and job creation.
Olaoluwa recently emphasised that BoI will continuously provide support fund for any Small & Medium Enterprises (SME) operators that may adopt some of the technological innovations developed by the National Agency for Science and Engineering Infrastructure (NASENI).
Olaoluwa stated this when he led the bank’s Management team on a working visit to the Agency Headquarters in Abuja even as he pledged the willingness of the Bank to collaborate with NASENI in promoting indigenous technology in Nigeria.
He noted that the Bank’s visit to NASENI was strategic because one of the key objectives of the bank is to ensure that it promotes active linkage between centers of innovation such as NASENI and all Bank of Industry affiliate institutes and SMEs nationwide.
“Our coming to NASENI is to know exactly the technologies that have been developed. To know the prototypes available so when we interact with our SMEs customers, we can discuss some of these technologies and encourage them to come and patronize NASENI”, he said. Mr. Olaoluwa however, advised on need for NASENI’s products to be patented to enable the Agency get returns on investment in form of royalty from its users to sustain the Agency.
His words: “These technologies that are already developed have to be patented because, if they are patented and the private sector comes, one key elements of the licensing agreement should be that for every unit of products sold, some amount in terms of royalty should come to NASENI and that is how institutes like this will be sustained.”
According to him: “There is direct correlation between engineering and technology on one hand, and the level of development on the other, a nation that wants to develop must pay attention to science and technology. It is my belief that any nation that has technology also controls the global economy.
Today, we are talking about diversifying the economy and no matter how hard we try without paying attention to technology; we will merely be scratching the surface. Technology is very critical to all sectors of our development and it is very important that we take technology serious” he further explained. Fit for the Task Prior to his appointment, Olaoluwa was the group chief executive officer of UBA Capital Plc, a pan-African asset management and investment banking group, from January 2013 to May 2014, and, prior to that, he was an executive director at the United Bank for Africa (UBA) between March 2008 and December 2012. This was coupled with his role as chief executive officer of UBA Africa, where he played a key role in the expansion of UBA’s operations into 18 countries in sub-Saharan Africa.
Before joining UBA in 2006, Olaoluwa’s career path had taken him across Arthur Andersen where he started his career in the financial services industry, and he has held various senior roles in marketing and relationship management, treasury management, currency trading and investment banking, crowning his appointment as the managing director/chief executive officer of the erstwhile Universal Trust Bank Plc.
An associate of the Institute of Chartered Accountants of Nigeria, the new managing director/chief executive officer holds a First Class honours degree in Civil Engineering from the University of Ife, and an executive MBA degree from International Graduate School of Management (IESE), Spain.