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Bank Of Industry to Disburse N5bn for Agro Processing Projects
Lagos – The Bank of Industry has unveiled plans to support 1,000 Small and Medium Enterprises that are involved in processing of agricultural products in Nigeria with N5bn.
A statement on Friday stated that the finance under the Cottage Agro Processing Fund would provide loans to entrepreneurs to establish small scale plants or mini mills, specifically to process products such as cassava, oil palm, paddy rice, groundnut, yam, maize, sorghum, cocoa, sheanut, plantain, cashew, hides and skin, meat, chicken and fish.
It stated that the Managing Director of the Bank, Mr. Rasheed Olaoluwa, disclosed this at a briefing in Lagos,Nigeria on Thursday, adding the loan facilities would be disbursed with a nine per cent interest rate, and one per cent management fee.
According to the statement, the BoI has identified a number of commercial banks known to be SME-friendly as potential partners, adding that the loans would be disbursed with easy-to-satisfy conditions.
Olaoluwa said, â€œWe plan to finance about 1,000 projects under this fund. We have identified the priority products for each state and have assembled a number of partners for the effective operation of this fund.
â€œThe loans will be granted at a single digit interest rate of nine per cent per annum and total management fee of one per cent.â€
Olaoluwa, however, stated that certain conditions must be met for any business to be supported.
He said, â€œThe projects financed must be located very close to the source of the agricultural products to be processed.
â€œThe business plan must address both the primary and secondary sources of energy to power the plant, and the equipment suppliers must be accredited by the BoI and must provide a performance bond, and enter into a maintenance agreement.â€
Olaoluwa disclosed that applicants for the funds could become beneficiaries within two to four weeks, if they had appropriate and suitable business plan.
The bankâ€™s MD further said that some business development service firms had been identified to help the potential beneficiaries package project models that could meet the BoI standard.
It noted that the N5bn CAP Fund came shortly after a N3.4bn Cassava Bread Fund was disbursed by the bank to finance the establishment of 41 processing plants for high quality cassava flour.
Olaoluwa who disclosed that the current N5bn CAP Fund would transit to a second phase after its completion in five years time.
â€œWe are also working with the Federal Ministry of Agriculture on a N13bn Rice Intervention Fund to establish 10 integrated rice mills and six cassava processing mills across the country,â€ he said.
According to the BoI boss, who drew examples from Ethiopia and Kenya, the CAP Fund aims to raise the value of Nigerian agricultural products in the international market.
He said, â€œIn Ethiopia, 10,000 pairs of shoes come out of Huajian Shoe Factory in the country everyday, and are sold by the biggest name in fashion. Ethiopian shoes under AGOA was nearly $7m in 2012.
â€œSimilarly, if you fly British Airways, you must have been served â€˜Out of Africaâ€™ nuts on board. Those nuts are produced in Kenya and the Kenya nuts company employs more than 2,500 skilled personnel.
â€œIn Nigeria, we have both leather and cashew nuts in abundance and there is no reason we cannot and should not displace these two countries,â€ he said.
Moreover, it added that the bank was looking at how it could use the CAP Fund to maximise some indigenous technologies, stating that they had some arrangements with the Federal Institute for Industry Research in this regard.