Nigeria’s leading development finance institution, the Bank of Industry, is on the threshold of becoming a veritable game-changer and growth catalyst for micro, small and medium enterprises (MSME) across the country. Tobi Soniyi reports
Last week in Aba, the Bank of Industry unveiled its new innovative product, Cluster Financing of small and medium industries in the manufacturing sector.
Specifically, the bank is propping no fewer than 70,000 artisans engaged in the leather products business. Each beneficiary, all members of the Leather Products Manufacturers Association of Abia State, LEPMAAS, have started receiving short-term loans, between N300,000 and N500,000.
The disbursement of loans to the first batch of beneficiaries was witnessed by Abia State Governor, Dr. Okezie Ikpeazu; the Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Mr. Edet Sunday Akpan, members of the organised private sector, sundry cooperative and business groups in Abia State.
The Aba Finished Leather Goods Cluster Financing scheme is driven by BoI, but Fidelity Bank will handle the disbursement of about N400m every quarter to 300 new target beneficiaries, all members of the cluster. The package was designed to provide a tailored bundle of financial and non-financial services including capacity building to qualified members of LEPMAAS. Beneficiaries will maintain SME accounts with the commercial bank and will enjoy zero-cost in opening current accounts.
Indeed, this latest intervention is targeting some 150,000 artisans at Aba shoe and leather goods cluster who produce shoes, trunk box, belt and bags for markets in Nigeria and its neighboring countries including Cameroun, Togo, Ghana, Senegal, Ivory Coast, Gambia and Mali. Members of LEPMASS, the umbrella association of the Aba Cluster, are in four distinct clusters with 284 production lines. The group is structured into 14 administrative zones.
Analysts have hailed this collaboration between the two banks as a win-win situation for its flexible terms, the propensity to accelerate import substitution in the leather products industry, create more jobs and earn the nation huge foreign exchange. Such optimism is not misplaced going by the enthusiasm exuded by the Managing Director of BoI, Mr. Olukayode Pitan. “Taking a cursory look at the Aba cluster and the contributions of the members of LEPMAAS to the leather sector, informal computations put revenue from the cluster at over N10 billion annually despite the competing volumes of similar goods being imported into the country,” he observed.
The federal government is not oblivious of this opportunity. It is writing a National Leather and Leather Products Policy after acquiring machineries and equipment to modernise the leather craft industry in Aba, the Minister of Industry, Trade and Investment, Dr. Okechukwu Enalamah, disclosed in his message.
The Aba Cluster scheme, owing to its tailored framework, may be the magic tonic to bring out the best from the famed industrial ingenuity of Abians.
The loan from BoI is at very low interest and is without any collateral; available for procurement of materials to expand and improve existing production lines. Pitan spoke on the promising outcomes. “It was this significant opportunity to substitute import volumes by supporting quality improvement of Made in Aba products, create additional jobs and improve the quality of lives of the artisans that led the Bank of Industry to design this tailored programme.