The Bank of Industry and the Nigerian Content Development and Monitoring Board (NCDMB) have launched a $50 million fund for oil and gas equipment manufacturers in Lagos, Nigeria.
A press statement that was issued on Wednesday, March 8 said the fund will tackle some challenges faced by Nigerian manufacturers, including power supply.
The purpose of the $50 million fund: According to the statement, the $50 million fund will incentivize companies that would operate in the Nigerian Oil and Gas parks scheme (NOGAPS) and engage in the manufacturing of equipment components used in the oil and gas industry and linkage sectors.
Also, the fund would support oil and gas companies that would operate in the oil and gas parks developed by the NCDMB in Bayelsa and Cross River States.
Different from the $300 million BOI fund: The statement further explained that the NOGAPs manufacturing fund is different from the initial $300m fund being managed by BOI with five product lines which aim at supporting Nigerian businesses that contribute their 1% to the Nigerian Content Development Fund.
Conditions for accessing the funds: During the signing of the agreement, the NCDMB Executive Secretary, Simbi Wabote, said that the fund will only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shop/floor within the park. Unlike the Nigerian Content Intervention Funds which requires companies to be contributors before they can benefit, the NOGAPS fund can be accessed by companies that will be domiciled and will manufacture their products within the oil and gas parks.
The fund will tackle manufacturing challenges: He stated that the new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure. He said:
- “The decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the endeavour, in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.”
Terms of engagement: According to Wabote, the fund will provide loans to Nigerian companies that meet the criteria to operate in any of the designated NOGAPS Industrial Parks for financing manufacturing activities, purchase of fixed assets, working capital and logistic.
- Beneficiaries will get a maximum single obligor of $3m and a minimum single obligor of $250,000.00 with a one-year moratorium repayable within five years at five per cent interest per annum.
- In the NOGAPS park, the rate for accommodation is reduced, power is guaranteed, and the rent will only begin to count when the company commences manufacturing.
Promoting in-country manufacturing: During the signing, the Managing Director, of the Bank of Industry, Mr Olukayode Pitan applauded the NCDMB for being a partner in progress. He noted that the fund will further help promote in-country manufacturing as well as the creation of employment. He also said that the interest rate will help companies easily access the product and pay it back. He said:
- “The interest rates are very good just like the initial fund which is less than 10% and the same thing will apply to this one. All we are looking for are Nigerians who want to manufacture in Nigeria.”