ENTERPRISE DEVELOPMENT POLICIES AND CAPACITY BUILDING OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN AFRICA-CASE STUDY OF THE BANK OF INDUSTRY (BOI) LIMITED, NIGERIA - PowerPoint PPT Presentation

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ENTERPRISE DEVELOPMENT POLICIES AND CAPACITY BUILDING OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN AFRICA-CASE STUDY OF THE BANK OF INDUSTRY (BOI) LIMITED, NIGERIA

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Title: ENTERPRISE DEVELOPMENT POLICIES AND CAPACITY BUILDING OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN AFRICA-CASE STUDY OF THE BANK OF INDUSTRY (BOI) LIMITED, NIGERIA


1
ENTERPRISE DEVELOPMENT POLICIES
ENTERPRISE DEVELOPMENT POLICIES AND CAPACITY
BUILDING OF SMALL AND MEDIUM SCALE ENTERPRISES
(SMEs) IN AFRICA-CASE STUDY OF THE BANK OF
INDUSTRY (BOI) LIMITED, NIGERIA
PRESENTATIION
BY MR
AUSTIN JO-MADUGU
GENERAL MANAGER(OPERATIONS)
BANK OF INDUSTRY AT THE
JOINT AUC-UNIDO UNECA EXPERT GROUP MEETING ON
THE IMPLEMENTATION STRATEGY OF THE PLAN OF
ACTION FOR THE ACCELERATED INDUSTRIAL
DEVELOPMENT OF AFRICA , OCTOBER 4-6, 2010 ,
ADDIS ABABA, ETHIOPIA
2

Introduction
  • I would like to begin this presentation by
    thanking the organizers of this conference for
    inviting the Bank of Industry Limited to deliver
    this paper on the theme ENTERPRISE DEVLOPMENT
    POLICIES AND CAPACITY BUILDING OF SMEs IN AFRICA-
    CASE STUDY OF THE BANK OF INDUSTRY LIMITED OF
    NIGERIA .

3
Introduction
  • This presentation will focus on initiatives by
    and experiences of the Bank of Industry (BOI)
    relating to SMEs development and capacity
    building programmes within the Nigeria context.

4
Government and SMEs Development
  • The Federal Government initiated and actualized
    some policy measures for the development and
    growth of SMEs. These include
  • Realignment of some sector specific development
    finance institutions (DFIs).
  • -The merger of the Family Economic
    Advancement Programme (FEAP), People's Bank of
    Nigeria and the Nigerian Agricultural and
    Co- operative Bank (NACB) into Nigeria
    Agricultural, Co-operative and Rural Development
    Bank (NACRDB)
  • -The merger of Nigeria Industrial Development
    Bank (NIDB), Nigeria Bank for Commerce and
    Industry (NBCI) and National Economic
    Reconstruction Fund (NERFUND) into Bank for
    Industry (BOI).
  • The establishment of Small and Medium
    Enterprises Development Agency of
  • Nigeria (SMEDAN).

5
Government and SMEs Development
  • Setting up of industrial estates in Lagos, Abuja,
    Kano, Enugu
  • and Sango-ota to reduce overhead costs
  • Establishment of Export Free Zones in Calabar,
    Kano,
  • Lagos, Port Harcourt and Abuja
  • The establishment of the Small Scale Industry
    Credit
  • Scheme (SSICSs) to provide long-term credit
  • Creation of Nigeria Export Promotion Council
    (NEPC) and
  • Nigeria Investment Promotion Council (NIPC)
  •  

6
Government and SMEs Development
  • Facilitating the establishment of the National
    Directorate of Employment
  • (NDE), which also initiated the setting up of
    new SMEs
  • Strengthening the National Economic
    Reconstruction Fund
  • (NERFUND) to provide medium to long-term
    local and foreign loans for
  • small, and medium scale businesses,
    particularly those located in the rural
  • areas and
  • Establishment of Industrial Development Centre
    (IDCs) and Technology Incubation Centres (TICs).
  •  

7
Private Sector Initiatives
  • The Nigerian private sector organizations and the
    Non-Governmental Organizations have equally
    played a significant role in the development of
    SMEs in Nigeria. Some of these are
  • FATE Foundation engages in training and
    mentoring of entrepreneurs has fostered the
    establishment of 1000 businesses by 2005 and
    5,000 businesses by 2015- established by Fola
    Adeola, the pioneer Managing Director of GT Bank
    Plc
  • ORGANIZATION FOR YOUTH EMPOWERMENT SOCIETAL
    RESTORATION INTIATIVE Involve in empowerment
    initiatives to individuals, communities and
    organizations to create employment opportunities.
  • LEAP Africa set-up to train, equip and empower a
    cadre of youths for leadership, effectiveness ,
    accountability, etc.

8
Private Sector Initiatives
  • MOVEMENT FOR YOUTH ACTUALIZATION INTL
    involved in programmes for youth liberalization
    and productivity education and development to
    the less privileged
  • ALLIANCE FOR AFRICA DEVELOPMENT An African led
    intl human rights, peace sustainable
    development organization
  • ASSOCATION FOR THE DISABLED WOMEN- creates
    awareness and support for disabled women
    entrepreneurs
  • BUSINESS PROFESSIONAL WOMEN NIGERIA- engaged in
    the provision of training education and
    opportunities to help women achieve economic
    independence
  • AFRICAN PROJECT FOUNDATION- solicits for fund and
    support for entrepreneurial development

9
Private Sector Initiatives
  • CENTRE FOR DEVELOPMENT AFFAIRS- Helping people
    acquire knowledge and skills
  • ACTIONAID INTL NIGERIA- an advocate of
    reproductive sexual health and right education
    human security in conflct and emergencies and the
    integrated partnerships against poverty.

10
Overview of SMEs in Nigeria
  • SMEs are the engine room for the development of
    emerging economies.
  • They are a major source of economic growth, job
    creation, innovation, exports and other key
    development indicators.
  • SME's are popularly defined in Nigeria as
    enterprises with total cost (including working
    capital but excluding cost of land) above N31
    million but not exceeding N150 million, with a
    labour size of between 11 and 100 employees.
  • In Nigeria, while SME's employ about 60 per cent
    of the labour force they contribute only 35 per
    cent of industrial output and account for 10 per
    cent of industrial exports. In the USA, SMEs
    account for more about 50 of all the business
    transactions carried out every year.

11
BOI Experience
  • The Bank of Industry
  • BOI was established in October, 2001 following
    the reconstruction of the Nigerian Industrial
    Development Bank (NIDB) by subsuming the mandates
    of NBCI and NERFUND (NERFUND has now been
    re-established ). NIDB had been in existence
    since 1964 as one of the oldest DFIs in Nigeria.
  • BOI is largely a Government-owned DFI charged
    with the responsibility of promoting the
    emergence of a virile industrial sector. BOI was
    conceived to catalyze the transformation of the
    real sector.
  • It finances largely acquisition of capital goods
    for large businesses, SMEs and lately
    micro-businesses.
  • .

12
BOI Experience
  • The strategic nature of the SMEs sector
    development in terms of industrial development
    attracted the interest of BOI in 2006 through a
    paradigm shift and motivated its increasing share
    in the Banks portfolio.
  • At present, the Bank extends at least 85 of its
    loanable resources to the SMEs sub-sector of the
    manufacturing sector.


13
BOI Experience
  • The Banks lending policy will continue to be
    positively favorable towards SMEs in alignment
    with national and international policies and
    goals such as.
  • - National Economic Empowerment and
    Development Strategy (NEEDS)
  • - Nigerias Vision 202020
  • - Millennium Development Goals

14
BOI Experience
  • Key Initiatives of the Paradigm Shift
  • A. FINANCIAL
  • 1. Increased allocation of the Banks loanable
    funds would be devoted to SMEs-
  • Lending to SMEs increased to 92 by December 2009
    from 65 in 2005
  • 482 increase in direct/indirect jobs expected
    to be generated by BOI
  • assisted companies from 140,000 as at December
    2005 to 815,000 as at
  • December 2009.
  • 2. Lending to enterprises that
  • - utilize local raw materials
  • - have high employment
  • - export generating capacities
  • 3. Setting up a Gender Desk to specifically
    handle ventures promoted by women entrepreneurs.

15
BOI Experience
  • 4. Encouraging the formation of Cooperative
    Groups to facilitate to them as individuals for
    acquisition of productive assets under a
    collective guarantee arrangement.
  • At date, the Bank has approved over N1.360
    billion under its Cooperative Financing window to
    more than 220 Associations involving about 25,000
    employment opportunities. It entails the creation
    of new products/ businesses/ cum expansion of
    existing businesses, such that it constitutes at
    least 85 of the Banks portfolio.
  • 5. A novel idea in project financing is the
    Counterpart Funding with State Governments. This
    programme ensures matching the funds provided by
    state governments for onward lending to projects
    from the partner-states. The Bank aims at
    doubling the amount of funds / states as well as
    the number of matched projects by the end of 2011.

16
BOI Experience
To-date, we have such arrangements with 13
State Governments with their contribution
totaling about N10.0billion. The success of the
programme has attracted the attention of some
Local Governments and wealthy individuals who
have indicated interest in such partnership with
BOI. The Bank aims to double this amount/ States
and interested individuals by the end of
2011. 6. Establishment of Micro Finance Bank. .

17
BOI Experience
  • B. CAPACITY BUILDING
  • 1. Organizing Boot- Camp workshop primarily to
    expose local existing and potential entrepreneurs
    to financial and management skills, business
    opportunities and financing. 15,000 entrepreneurs
    in 275 cooperative societies so far trained.
  • 2. Providing training for entrepreneurs under
    AGOA (African Growth Opportunities
    Act) for which it houses a Resource Center. About
    400 SME Exporters have been trained
    .
  • 3. Sponsoring SMEs to local and international
    investment fora and trade
  • exhibitions
  • 4.Collaboration with local and international
    development partners( such as SMEDAN, NEXIM, UN
    Group) in the training of entrepreneurs and
    staff.
  • .
  •  
  •  

18
BOI Experience
  • BOI has working relationship with the following
    - Development Bank of Japan Inc (DBJ), Japan Bank
    for International Cooperation (JBIC), Japan
    International Cooperation Agency (JICA), Japan
    Economic Research Institute Inc (JERI), Japan
    Finance Corporation for Small Medium
    Enterprises (JASME) amongst others.
  • The Bank also has MOUs/Working Relationships with
    the World Bank Group, African Development Bank
    Group, Islamic Development Bank (IDB), Industrial
    Development Corporation of South Africa Ltd
    (IDC), Tokyo International Conference on African
    Development (TICAD), SME Bank of Thailand, UNDP,
    UNIDO, etc.

19
CHALLENGES OF FINANACING SMES IN NIGERIA
BOI Experience
  • Poor credit culture/Integrity issues
  • 2. Infrastructural inadequacies which militate
    against cost and operational efficiencies e.g
    power, transportation, ports etc.
  • 3. Poor financial and technical knowledge/skills
  • (proposals, financial statements, management of
    cash flows, etc.)
  • 4. Monitoring issues dispersed, costly
  • 5. High dependence on import for both capital
    goods and raw materials

20
SOLUTIONS
BOI Experience
  • Controlled disbursement
  • Closer monitoring
  • Training education skills
  • Mentoring and exposure to best practices
  • Development of the petrochemical/gas sectors
  • Revamping of collapsed local steel and industrial
    good factories

21
Concluding Remarks
  • 1. We, in the Bank of Industry, believe that
    SMEs are veritable vehicles of industrialization
    of any nation. In line with our mandate, we
    strongly believe in SMEs and we are committed to
    doing the needful to further their growth,
    development and sustenance.
  • 2. We thank the organizers of this conference
  • 3. It is our hope that the Governments of African
    countries and all stakeholders will henceforth
    begin to formulate/implement policies and
    programmes for the development of SMEs to
    facilitate industrialization of the African
    continent.

22
Thank you for your attention
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