News Column

BOI Is Going to Pursue SMEs Financing Aggressively - Olaoluwa

July 18, 2014

Kayode Ekundayo, Kayode Ogunwale

Rasheed Olaoluwa is the new Managing Director and Chief Executive Officer of Bank of Industry (BoI). In his maiden media briefing held in Lagos, weekend, he says the bank would be rigorous enough to ensure that the loan portfolio remains good and meet the needs of the nation's economy. Excerpts:

Being in commercial banking for many years, now you are in development banking, what specifically are you bringing on board?

In the last 26 years, I have interacted with several sectors both in Nigeria and outside Nigeria, I have interacted with international finance institutions and what is critical at this level is the understanding of the issues and the issues are very clear to me. There is always a development agenda that supports the provision of long term low interest rate to industry/ small scale enterprises with the views to helping to industrialise the economy and create jobs. The issues are the same everywhere. I believe that a combination of all the experiences that I have gathered over the last 26 years will stand me in good stead at BoI.

Knowing that Bank of Industry is a development bank and government owned, do you have the deep skill to say no to pressure from men above?

I don't think you meant saying no, just for the sake of saying no. It's essential to say no when there is cause to say no and all I can say is I have spent about two months and I have not seen anything to say no to yet. But if I get to that stage with my background, I'm a man that should stand up to superiors.

How does your loan performance look like?

This is always a problem with development finance institutions because there is a dilemma between holding straight asset quality and the developmental social impact in between the gap, you need to find your own position. One of the things I find out is that it is possible to pursue the developmental social effect necessarily lowering your asset quality, that's what we are trying to do. There is a development bank in Brazil that is very big BNDS. BNDS has a non performing loan ratio of 2.2 per cent, they are actually better than some of our private sector banks in Nigeria. That is a challenge we are giving to ourselves, we are going to pursue social impact, development SME's and all that, at the same time we would be rigorous enough to ensure that the loan portfolio remain on good quality. We have done total loan figure of N672 billion till date, the bulk of that is CBN intervention fund which is about N468 billion. The total today of CBN intervention is N468 billion and they are 100 per cent performing. Other SME's loans and textile loans are at the ratio of about 19 per cent.

Compared to other development finance institutions, we are not doing badly.

What strategic plan do you have for mobile sector?

There is a National Industrial Revolution Plan (NIRP) which has identified four key sectors which Nigeria has comparative advantage.

The first sectors is the agric agro-allied, agro processing sector, whereby we are looking at not just exporting crops but adding value local to them, we are looking at processing those crops before we export them or consume them locally. The second sector is oil/gas and energy, which we all agree that it is one of the important sectors to Nigeria. What is also important is to add value to the oil sector activities. In Nigeria that is not well done. What we are trying to do under the NIRP is to ensure that a lot of value is added. For instance, we are going to encourage petro-chemical industries, fertiliser industry so that that value addition can happen. Also, energy and gas infrastructure investment will be encouraged. This was one of the area we discussed when I met with the governor of Central Bank of Nigeria, there is going to be a lot of emphasis on gas infrastructure because the reason why we had instances of shortage of gas is because of lack of infrastructure to be able to transfer the gas from the gas plant to where they are required in the power plant.

The third sector is solid minerals and metals. If you are talking about industrialisation in Nigeria the metal sector is very critical. The recently rebased GDP figures put our manufacturing sector contribution to our GDP at 6.8 per cent, if you look at countries like Brazil, South Africa, Indonesia, Malaysia they are in excess of 15 percent, so we have a long way to go and the only way to do that is to add some processing to the basic solid minerals that we have in the metal sector.

Lastly, we are looking at light manufacturing, in terms of some FMCG products. These are the key sectors that have been identified.

What is your plan on auto car loans?

What we are trying to do as a development bank is to try as much as possible not to compete with commercial banks, we look at long term industrial facilities projects but if you are going to take a car loan for up to four years in Nigeria today, banks are doing very well in that regards and we don't want to compete with them on that.

What is the nature of your strategic intervention in auto industry?

There are companies that are looking at local assembly, there are companies that are looking at manufacturing vehicle component locally rather than importing them, these are people we are discussing with, and we can finance the local manufacturing of some of the car component.

What do you intend to do to ensure that accessing loan will not be a problem?

I admit we don't have the best process but we are taking step to overhaul our credit delivery process. Recently, we had a meeting to look at how we can accelerate the process and one of the things we are looking at is small enterprise businesses, many people can benefit from this. Also, the way the credit flows within our system, we are looking at that as well and we believe that this should result in a very efficient credit appraisal process.

What do you intend to do in textile industry as it is lacking behind other sectors?

The truth is that we have actually intervened in textile industry. We have a Textile and Garment Funds and we have disbursed in excess of N51 billion to manyof the textile industries. We are hoping that that intervention can lead to the turnaround of the sector.

What are the business models BoI is going to pursue in disbursing loan?

We want to deal with Business Support Firms (BSF) and the whole idea is that because a large percentage of loan applications that comes to BoI are substandard. What we think is a way out is to engage BSF to receive the applications and help to review it. They are the people that will be within your locality, BoI only exists in Lagos and Abuja and six zonal offices. We want to have professional people who understand how a bankable proposal should look like in every state. They would seat down with SME's and help you to package the request.

That is key element of our business process going forward.

Some people are complaining that what you give them is loans for machinery and not working capital, what are you going to do about this?

We try as much as possible not to be in competition with commercial banks but to collaborate with them. We are looking at a model where BoI will partner with SME's friendly banks so that as we are giving long term project loan, the banks will also be giving short term working capital facilities and that way we can work together to succeed in this sector.

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Source: AllAfrica

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