The Federal Government has granted N1.24 trillion to 4.21 million businesses through the Bank of Industry in the last six years, according to the bank’s most recent report on disbursements.
According to the report’s data, micro, small, and medium-sized firms, as well as large-scale organizations, received loan and grant disbursements between 2015 and 2021.
The paper, headed “Institutional Turnaround for the Next Level,” received by our reporter in Abuja on Friday, stated that a total of N315 billion was given to over 4.2 million MSMEs.
During the six-year period, he calculated that 4.896 million direct and indirect employment were generated across the country.
For major firms, the BOI CEO claimed that the government disbursed N927.1 billion through the bank to 1,074 businesses, producing 9.048 million direct and indirect employment during the review period.
He stated that the bank supported the delivery of N68.0 billion ($220.6 million) to 2.9 million beneficiaries under the Government Enterprise Empowerment Programme and the N-Power Social Investment Programmes. According to the report on the North East Rehabilitation Fund, “to far, N569.3mn ($1.8mn) has been distributed to 56,934 recipients.”
It claimed that the bank supported the release of the 7N5 billion MSME Survival Fund under the Nigerian Economic Sustainability Plan. “To date, N58.68bn has been disbursed to 881,748 beneficiaries under the scheme,” the report stated.
For disbursements to businesses under the micro-enterprises category, the report explained that they included formal, informal businesses and co-operatives, including market women, traders and artisans.
It further said that the aim was to manage the Federal Government’s initiatives to support micro-enterprises, given that they were serviced via technology and telecoms platforms, state offices and microfinance banks. It added that “the segment typically seeks finance of up to N10m.”
In the small and medium enterprise category, it stated that registered SMEs were identified across key clusters and were serviced through BOI state offices across the country, as the loan values were between N10m- N1bn
Large enterprises included registered large companies across key sectors of the economy, as they were serviced primarily at the BOI head office and got loan amounts of over N1bn. The report further stated the bank developed partnerships with state governments, foundations and high-net-worth Individuals which had led to what it described as “Matching Fund” schemes.
“Matching Funds is a collaborative funding scheme between BOI and other partners institutions such as state governments, agencies and high net worth individuals on a 50:50 contribution basis. It is designed to provide finance to SMEs,” the banks stated.
It added, “BOI is in partnership with 25 state governments with a total fund size of over N11bn. The interest rate is between five to 10 per cent per annum. There is an N5bn matching fund partnership between the BOI and Dangote Foundation. Interest rate is five per cent per annum.”
The Chief Executive Officer, Centre for the Promotion of Private Enterprises, Dr Muda Yusuf, said it was vital for the government and its agencies to continue supporting businesses across the country.
This, he said, was because many businesses in Nigeria, for instance, manufacturers, had continued to grapple with the problems of the high cost of logistics, access to foreign exchange, access to raw materials and the impact of excise duty on alcoholic or non-alcoholic beverages
“This is impacting demand for their products. The high inflationary pressure is also constraining the capital expenditure of many of the manufacturing firms,” Yusuf stated.
He added, “Capacity to expand is being constrained because of the high inflationary situation. These are some of the challenges that are faced by the manufacturers and many other businesses.”
Output has declined significantly in many industries because of the challenges of accessing raw materials due to the scarcity of foreign exchange. Many players in the economy now resort to the patronage of the parallel market at a very prohibitive cost, as very little access exists to the official window.
The sharp depreciation of the exchange rate and the parallel market which is over 300% has endangered the profitability of investments. The capacity to retain employment and the capacity to create new jobs have been greatly endangered because of the foreign exchange crisis.