Bank of Industry signs MoU with 10 banks in Nigeria

stanchartered-canadianpacific-flickrStandard Chartered Bank Limited is one of the 11 banks that Nigeria's BOI has signed an MoU with to provide loans to SMEs. (Image source: CanadianPacific/Flickr) Nigeria’s Bank of Industry (BOI) has signed an MoU with ten deposit banks to provide loans to SMEs at low-interest rates

The banks partnering with BOI are Access Bank Plc, Diamond Bank Plc, Ecobank Limited, Fidelity Bank Plc, First Bank Limited, First City Monument Bank Limited, Skye Bank Plc, StanbicIBTC BankPlc, Standard Chartered Bank Limited, and United Bank for Africa Plc- they have been chosen based on their existing support to SMEs.

According to Rasheed Olaoluwa, chief executive of BOI, access to affordable finance is one of the major reasons inhibiting growth and development of SMEs in Nigeria. Through the MoU, banks can provide working capital loans to SMEs qualified by the BOI at interest rate of Monetary Policy Rate plus six per cent, with tenor ranging from six months to a year. BOI, on the other hand, will provide term loans.

The financial institution added that it wanted to augment the low level of financial support available to SMEs as well as address poor loan packaging. The first approach towards achieving steady financial support was the recent accreditation of 122 Business Development Service Providers (BDSPs) located across Nigeria. The BDSPs will assist SMEs in the development of bankable business plans and proposals, which will facilitate their access to finance; and provide post-finance services to the SMEs such as mentorship, handholding, financial advice and inculcation of best practices.

Another strategy was to approach SME-friendly commercial banks to partner with BOI in co-financing the SMEs. The activities in which BOI and the SME-friendly banks would collaborate include – provision of long-term loans to qualified SMEs by BOI based on its risk acceptance criteria; provision of working capital to the SMEs by the SME-friendly banks also based on their individual risk acceptance criteria.

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