The Managing Director, Bank of Industry, Mr Olukayode Pitan, has said the $750m (N250bn) syndicated loan facility, which it received from the African Export-Import Bank last week, will be disbursed to Micro, Small and Medium Enterprises at single digit interest rate.
Pitan stated this in an interview with our correspondent on the sidelines of the AFREXIM Bank Annual Meetings held in Abuja.
He said the loan, to be given to entrepreneurs in Nigeria for a period of between five and seven years, would enable the bank to bridge the funding gap for MSMEs, which he estimated at about N700bn.
Pitan explained that the N250bn was the single largest syndicated facility to be received by a development finance institution in Nigeria, adding that a total of 16 banks financed the deal.
Some of the banks that provided the fund are the Africa Export-Import Bank, the ECOWAS Bank for Investment and Development, and British Arab Commercial Bank Plc, among others.
He stated, “There were 16 international banks that took park. Four Nigerian banks that were based in the UK were a part of it. This money is medium-term, which is three years, and the interest is very good when you look at the rate Nigeria usually borrows.
“The idea is to support industries. What this loan allows us to do is that it gives additional N250bn; depending on the exchange rate that is used, between N230bn and N250bn, to deploy in the industrial sector. We have done our own study.
“There is gap in the funding of the industrial sector to the tune of N704bn. This is our way to reduce that gap.”
He said the fund would be given to companies operating in the creative industry, manufacturing and gender-based businesses.
This, he noted, would help reduce the unemployment rate in the country and create wealth for small and medium-scale entrepreneurs. Pitan stated, “We are looking at small, medium and large enterprises. We are looking at enterprises or companies that have a focus in using local raw materials, companies that generate employment and bring down their cost of borrowing.
“This loan will be deployed at less than 10 per cent interest per annum. We are looking at the creative industry, light manufacturing, mining, gender business etc. to promote the Nigerian industrial sector.
“We are working with the Central Bank of Nigeria that the loan we will give to Nigerian businesses will be a longer term loan of between seven to eight years for the industrial sector.”