BoI announces N5b agro processing fund
BY ABU IDRISU
The Bank of Industry (BoI) on Thursday announced a N5 billion fund to support Small and Medium Enterprises (SMEs) dedicated to processing of agricultural products in Nigeria.
The fund, referred to as Cottage Agro Processing (CA) Fund, would provide loans to finance not less than 1,000 small scale plants or mini mills, specifically established to process products like cassava, oil palm, paddy rice, groundnut, yam, maize, sorghum, cocoa, sheanut, plantain, cashew, hides and skin, meat, chicken and fish.
Managing Director of the bank, Rasheed Olaoluwa, who disclosed this at a briefing in Lagos on Thursday, also said the loan facilities tied to the Fund would be disbursed with a 9 per cent per annum interest rate, and a paltry one per cent management fee.
“We plan to finance about 1,000 projects under this Fund. We have identified the priority products for each state and have assembled a number of partners for the effective operation of this Fund,” Olaoluwa said.
Giving further details, he said, a number of commercial banks with proven records of being SME friendly have been identified as partners, adding that the loans would be disbursed with easy-to satisfy conditions.
“The loans will be granted at a single digit interest rate at 9 per cent per annum and total management fee of one per cent,” the BoI MD said.
Olaoluwa, however, stated that certain generic and specific conditions must be met for any business to be supported.
“The projects financed must be located very close to the source of the agricultural products to be processed.
“The business plan must address both the primary and secondary sources of energy to power the plant, and the equipment suppliers must be accredited by BoI and must provide a performance bond, and enter into a maintenance agreement,” he said.
Applicants for the fund could become beneficiaries within two to four weeks, if they have the appropriate and suitable business plan, Olalouwa also disclosed.
The bank’s MD also said some business development service firms have been identified to help the potential beneficiaries package project models that could meet the BoI standard.
The N5 billion CAP Fund comes shortly after a N3.4 billion cassava bread fund was disbursed by the bank to finance the establishment of 41 processing plants for high quality cassava flour.
Olaoluwa, who disclosed that the current N5 billion CAP Fund would transit to a second phase after its completion in five years time, added: “We are also working with the Federal Ministry of Agriculture on a N13 billion Rice Intervention Fund to establish 10 integrated rice mills and six cassava processing mills across the country.”
The CAP Fund aims to leapfrog value for Nigerian agricultural products in the international, according to the BoI MD, who drew examples from Ethiopia and Kenya.
“In Ethiopia, 10,000 pairs of shoes come out of Huajian Shoe Factory in the country every day, and are sold by the biggest name in fashion. Ethiopian shoes under AGOA was nearly $7 million in 2012.
“Similarly, if you fly British Airways, you must have been served ‘Out of Africa’ nuts on board. Those nuts are produced in Kenya and Kenya Nuts Company employs more than 2,500 skilled personnel.
“In Nigeria, we have both leather and cashew nuts in abundance and there is no reason we cannot and should not displace these two countries,” he said.
The Bank of Industry (BoI) on Thursday announced a N5 billion fund to support Small and Medium Enterprises (SMEs) dedicated to processing of agricultural products in Nigeria.
The fund, referred to as Cottage Agro Processing (CA) Fund, would provide loans to finance not less than 1,000 small scale plants or mini mills, specifically established to process products like cassava, oil palm, paddy rice, groundnut, yam, maize, sorghum, cocoa, sheanut, plantain, cashew, hides and skin, meat, chicken and fish.
Managing Director of the bank, Rasheed Olaoluwa, who disclosed this at a briefing in Lagos on Thursday, also said the loan facilities tied to the Fund would be disbursed with a 9 per cent per annum interest rate, and a paltry one per cent management fee.
“We plan to finance about 1,000 projects under this Fund. We have identified the priority products for each state and have assembled a number of partners for the effective operation of this Fund,” Olaoluwa said.
Giving further details, he said, a number of commercial banks with proven records of being SME friendly have been identified as partners, adding that the loans would be disbursed with easy-to satisfy conditions.
“The loans will be granted at a single digit interest rate at 9 per cent per annum and total management fee of one per cent,” the BoI MD said.
Olaoluwa, however, stated that certain generic and specific conditions must be met for any business to be supported.
“The projects financed must be located very close to the source of the agricultural products to be processed.
“The business plan must address both the primary and secondary sources of energy to power the plant, and the equipment suppliers must be accredited by BoI and must provide a performance bond, and enter into a maintenance agreement,” he said.
Applicants for the fund could become beneficiaries within two to four weeks, if they have the appropriate and suitable business plan, Olalouwa also disclosed.
The bank’s MD also said some business development service firms have been identified to help the potential beneficiaries package project models that could meet the BoI standard.
The N5 billion CAP Fund comes shortly after a N3.4 billion cassava bread fund was disbursed by the bank to finance the establishment of 41 processing plants for high quality cassava flour.
Olaoluwa, who disclosed that the current N5 billion CAP Fund would transit to a second phase after its completion in five years time, added: “We are also working with the Federal Ministry of Agriculture on a N13 billion Rice Intervention Fund to establish 10 integrated rice mills and six cassava processing mills across the country.”
The CAP Fund aims to leapfrog value for Nigerian agricultural products in the international, according to the BoI MD, who drew examples from Ethiopia and Kenya.
“In Ethiopia, 10,000 pairs of shoes come out of Huajian Shoe Factory in the country every day, and are sold by the biggest name in fashion. Ethiopian shoes under AGOA was nearly $7 million in 2012.
“Similarly, if you fly British Airways, you must have been served ‘Out of Africa’ nuts on board. Those nuts are produced in Kenya and Kenya Nuts Company employs more than 2,500 skilled personnel.
“In Nigeria, we have both leather and cashew nuts in abundance and there is no reason we cannot and should not displace these two countries,” he said.
Post a Comment