BoI driving growth with €1.879bn industrial financing solutions amidst rising interest rates

Against a backdrop of escalating interest rates imposed by commercial banks, which have hindered the growth of Small and Medium Enterprises (SMEs) in Nigeria, the Bank of Industry (BOI) is making significant strides to provide low-interest credit facilities aimed at enhancing productivity, generating employment and fostering inclusive economic growth.

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The BOI concluded 2024 on a remarkable note, achieving a landmark fundraising of €1.879 billion from international financial markets, marking the highest amount ever raised by any Nigerian or African Development Financial Institution (ADFI) to date.

This substantial influx of capital is expected to bolster the BOI’s balance sheet significantly, increasing it by N3.3 trillion to an anticipated total of N7.1 trillion, up from N3.9 trillion reported in 2023. Such accomplishments underscore the BOI’s capability to address Nigeria’s industrial financing challenges effectively.

As a key promoter of the National Credit Guarantee Company (NCGC), BOI is poised to deploy these resources securely, sharing risks with NCGC to guarantee loans for SMEs and thereby facilitating increased lending to the private sector.

In his New Year address, President Bola Ahmed Tinubu praised BOI for its leadership in enhancing credit delivery processes within Nigeria’s financial system. He remarked that his administration would further consolidate access to credit for individuals and critical sectors of the economy, with plans to establish the National Credit Guarantee Company aimed at expanding risk-sharing instruments for financial institutions and enterprises. This initiative is expected to commence operations before the end of Q2 2025 and involves collaboration between various government bodies and private sector entities.

The BOI has maintained investment-grade ratings from Fitch and Moody’s since 2015, reflecting its sound management and governance practices. The recent €1.879 billion syndication attracted significant interest from a diverse array of international investors, particularly from the Middle East and Asia, indicating BOI’s growing appeal as a trusted partner in Nigeria’s industrialization efforts.

Analysts have noted that the oversubscription of 187.9% for this syndication highlights innovative financing achieved through a dual-layer guarantee structure involving support from the Africa Finance Corporation (AFC) and the Central Bank of Nigeria (CBN). This structure allowed BOI to secure lower interest rates than typically associated with Nigerian debt instruments, resulting in substantial savings that will enhance competitiveness for borrowers in the real sector.

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Ambrose Omordion, Chief Operating Officer at InvestData Consulting Limited, remarked that 2024 would be remembered as one of BOI’s most successful years in its 65-year history, with unprecedented achievements including being recognised for the largest single transaction ever conducted by a Nigerian development finance institution.

Olasupo Olusi, Managing Director/CEO of BOI, emphasised that the favorable terms of the recent fundraising will ensure that low-interest and longer-tenured funds are available for Nigeria’s burgeoning private sector in alignment with President Tinubu’s vision. The raised funds aim to bridge an annual development financing gap exceeding $35 billion and support BOI’s strategic objectives for 2025-2027.

According to him: “The Bank of Industry’s enlarged balance sheet occasioned by the approximately €2 billion fund raise will boost the Bank’s Interventions and Operations and ultimately enhance its developmental impact in the following ways: The €1.879 billion fund raised will go a long way in bridging the current annual development financing funding gap of over $35 billion (BCG, 2024); Support the implementation of BOI Strategy for 2025 – 2027. One of the key themes is increase BOI financing along several areas to meet Nigeria’s developmental needs. This fund raise provides the capacity for BOI to deliver on its mandate; BOI will seek to address infrastructure challenges which impose a high cost of doing business on manufacturers in Nigeria.”

He added that: “Infrastructure finance requires long-term and high value financing which the freshly raised fund will support. The confidence in BOI demonstrated by this historic transaction will enhance its ability to access additional sector specific funds particularly funds that are targeted at vulnerable sectors and segments like Gender, Youth, Micro, Small and Medium Enterprises, MSMEs, Agriculture, ESG and Sustainability.”

The bank has also committed to addressing infrastructure challenges that elevate business costs for manufacturers in Nigeria. By leveraging this newly acquired funding, BOI aims to enhance its capacity to deliver impactful projects across various sectors including gender equality, youth empowerment, micro and small enterprises (MSEs), agriculture, and sustainability initiatives.

Reflecting on its evolution since its inception as the Investment Company of Nigeria in 1959, BOI has consistently adapted to meet Nigeria’s economic demands while positively impacting countless lives through job creation and support for businesses. The bank’s strategic partnerships with local public and private institutions as well as global financial organisations have been instrumental in fulfilling its developmental mandate.

Dr Olusi said: “Starting from our humble beginnings as the Investment Company of Nigeria (ICON) in 1959, to the Nigerian Industrial Development Bank (NIDB) in 1964, and finally our transformation into the Bank of Industry in 2001, the Bank has continuously evolved to meet the changing needs of Nigeria’s economy. In doing so, we have positively impacted the lives of countless Nigerians by supporting businesses, promoting job creation and facilitating inclusive economic growth. As Nelson Mandela aptly noted, ‘The past is not merely a place of reference but also a source of inspiration for building the future.’ This principle guides us as we reflect on our history to chart the course ahead in continuing impacting the lives of countless Nigerians by supporting business, promoting job creation, and facilitating inclusive economic growth.”

The Bank also has a robust onlending programme with various financial institutions, including microfinance banks and fintechs. In 2015, BOI commenced a national footprint expansion by opening eight state offices.

Dr Olusi stated further: “This drive has continued through the years, and I am proud to say that today, the bank has a presence in 33 states nationwide. In 2017, BOI commenced raising funds on the international market with a $750 million AFREXIM loan. Since then, we have successfully raised over $5 billion from the international capital markets through Eurobonds, loan syndications, and green finance instruments.

“We also have partnerships with trade associations, such as the National Association of Small and Medium Enterprises (NASME), Nigerian Association of Small-Scale Industrialists (NASSI), and Manufacturers Association of Nigeria (MAN), to deepen real sector financing. BOI recently signed a partnership agreement with SMEDAN to provide Nano and Micro Enterprises in Nigeria with a N1 billion fund at a single-digit interest rate. We have partnerships with several other public agencies like NCDMB, to support specific sectors.

“In November 2023, the Federal Government of Nigeria appointed BOI as the executing agency for the N200 billion FGN MSME Intervention Fund, which includes a N50 billion Presidential Conditional Grant Scheme (PCGS), a N75 billion Manufacturing Sector Fund and a N75 billion MSME Intervention Sector Fund. This programme is currently being disbursed and there are numerous stories on the impact on private enterprises.

“Our strategic partnerships also extend to numerous organisations such as AfDB, the African Finance Corporation (AFC), Investment Climate Reform (ICR) initiative, the African Guarantee Fund (AGF), the Multilateral Investment Guarantee Agency (MIGA), the United States Export-Import Bank (USEXIM), the International Finance Corporation (IFC), etc. and several others.

“In the last 12 months, we have also revised our strategy to focus on impact and introduced various strategic initiatives in alignment with President Tinubu’s Renewed Hope Agenda and in response to emerging macroeconomic issues.

“In 2024, we introduced our six thematic focus areas to drive developmental impact Gender, Climate and Sustainability, Youth and Skills, Digital Economy, and Infrastructure. These themes stem from their importance to Nigeria’s overarching development and will guide our financing interventions in the Nigerian economy.

“This year, we launched the Rural Areas Programme on Investment for Development (RAPID) programme, to promote financial inclusion and support the development of micro and small businesses in rural Nigeria, focusing on youth and women. We are improving on our product offerings with plans to scale up Non-Interest Banking (NIB), Export Credit Agency (ECA) and Supply Chain Finance (SCF) with a view to provide adequate financing to various economic clusters, recognising our national diversity to drive economic growth. In alignment with Nigerias sustainability agenda, BOI has also launched a climate focused initiative. As a testament to this, BOI has been nominated as a Direct Access Entity by the Nigeria Climate Change Commission (NCCC) to access financing for climate projects through the Green Climate Fund (GCF),” the BoI managing director added.

He stated that this designation empowers BOI to spearhead climate initiatives and support sustainable development efforts in Nigeria.

He stressed: “In October 2024, the Bank held its first Inaugural Annual Lecture Series and launched two publications, the BOI Journal of Development Finance (Technical) and the BOI Journal of Development Review (Non-Technical); as well as a price intelligence platform for real-time monitoring of price variations of food commodities across the country.

“This platform seeks to enhance transparency and accountability in the food commodity market by providing real-time insights into price trends, stabilising markets, protecting consumers, and informing policy decisions. Beyond the Banks efforts, we have also started to implement steps to ensure our subsidiaries are key contributors to national impact.

“The BOI board approved a N50 billion recapitalisation of one of our subsidiaries, LECON Financial Services. The new funding will enable LECON to support key sectors and better respond to increasing customer interest in asset acquisition through leasing as an alternative to outright purchasing equipment at a relatively lower cost and longer tenure, taking pressure off business owners.

“Another subsidiary of the bank, BOI Investment and Trust Company Limited (BOI-ITC), has been re-issued by the Securities and Exchange Commission (SEC), its Trusteeship Operating License. BOI-ITC will re-enter the trusteeship market, focusing on Trusts/Trusteeship Services, Consultancy, Business Advisory, Governance Advisory, and Nominee Services. We have increased the capitalization of BoI Microfinance Bank to enable it to obtain a state licence, rather than its current unit licence. Our people are at the heart of BoIs strategy.

“As a result, we have prioritised staff engagement and improved their welfare through professional development opportunities, employee recognition programmes, wellness initiatives, workplace support advocates and so on.

“All these efforts have not gone unnoticed. In 2014, BOI received multiple awards from the EMEA Award for Best Social Development Program in Africa for the Investment in Digital and Creative Economy (iDICE), the SERAS Award for Best Company in Financial Inclusion and Most Effective MDA/Parastatal in Sustainable Development and the Philips Consulting Award for Best Website and Overall Best Digital Presence for a Federal Parastatal.”

Looking ahead, Dr Olusi reaffirmed BOI’s commitment to driving sustainable industrialization through innovative financing solutions while advocating for policies that foster a supportive environment for MSMEs and startups. This holistic approach aims not only to strengthen Nigeria’s economy but also to enhance living standards across the nation.