THE Nigerian Content Development and Monitoring Board, NCDMB, and the Bank of Industry, BOI, have launched a $100 million Nigerian Content Intervention Fund, NCI Fund.
The fund is a major step geared toward addressing the paucity of funds and inability to access credit, which often beset manufacturers, service providers and other key players in the Nigerian oil and gas industry.
The pool of funds will be managed by the BOI, to lend directly to qualifying players in the oil and gas industry under competitive terms.
This is a departure from the old model whereby the Nigerian Content Development Fund, NCDF, provided partial guarantees and 50 per cent interest rebate to service companies who obtained facilities from commercial banks for asset acquisition and projects execution. Under the old model, which became operational in 2012, three companies-Ladol, Starz and Vandrezzer consummated transactions.
Speaking at the formal launch and Memorandum of Understanding, MoU, signing ceremony of the NCI Fund in Lagos, the Acting Executive Secretary of the NCDMB, Mr. Patrick Daziba Obah, explained that the Board opted for the new model in response to the feedback it received from industry stakeholders who experienced difficulty accessing the funds.
He stressed that the Board was leveraging on the experience of the BoI in development financing. He added “The MoU between our two agencies reflects the strong determination of BoI and NCDMB to lead the process of industrialisation, by closing the gap in financing of projects that have high prospects of creating employment, retaining revenue in-country and adding value to our economy.”
According to him, benefiting companies are expected to deploy the funds for the acquisition of fixed assets (machinery and ancillary equipment). They can also use the funds as working capital, for leasing of industrial and business equipment and construction and acquisition of marine vessels.
Speaking further, Obah listed the revised features of the NCI Fund to include: compliance with the Treasury Single Account, TSA policy of the Federal Government on-lending to beneficiaries eight per cent interest rate, long tenure of up to ten years, single obligor limit of $10 million and varied application which can include manufacturing, asset ownership etc,”
Also speaking, the Acting Managing Director, BoI, Mr. Waheed Olagunju, underscored similarities in the mandate of NCDMB and BoI, noting that both agencies were created to drive the industrialisation of Nigeria and add value to the nation’s natural resources.
He assured that the NCI Fund would avoid the pitfalls which limited the success of the NCDF, and ensure that qualified service companies access the funds they need to grow capacity.
On the conditions for accessing the NCI Fund, Olagunju explained that the Bank would consider viability as well as social impact of loan proposals before granting credits, pledging that it would apply its competencies and tested banking principles to surpass the expectations of potential beneficiaries.
He also promised that the Bank would guard against persons who obtain loans from government agencies without any plan of repayment.
In his remarks, the Chairman of the Petroleum Technology Association of Nigeria, PETAN, Mr. Bank-Anthony Okoroafor, commended the Board for being responsive to the demands of the industry stakeholders, who clamoured for a change in the operating model of the NCDF.
He noted that many PETAN members were unable to access the Fund under the old model because of the posture of banks to financing oil and gas projects as well as other cumbersome conditions. “Several companies had good ideas and projects but could not access the funds,” he said.
Okoroafor also challenged the Board to increase the size of the NCI Fund to $600million so that legacy projects like a big shipping yard can be set up in the country, and also canvassed that primary consideration be given to companies that already had proven capacities.