Leather industry gets boost as BoI embraces made in Aba

Posted by Omiko Awa | 2 September 2018 | 1,385 times

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•Made in Aba leather shoes

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.

Last week in Aba, BoI 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 organized private sector, sundry cooperative and business groups in Abia State.

BoI drives the Aba Finished Leather Goods Cluster Financing scheme 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 neighbouring 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.

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.

“By providing low interest, non-collateralized loans, BoI has offered flexibility for qualified members of LEPMAAS recommended by their line and zonal chairmen to access up to N300, 000 towards the procurement of materials to expand and improve their production activities. These members are also covered by a guarantee provided by the LEPMAAS executives who are working closely with the Bank to ensure prompt repayment of these loans by the beneficiaries,” he elaborated.

For the industrious Aba craftsmen, this is also an opportunity to learn best practice methods. The BoI is offering “a bouquet of financial and non-financial services.” The Ford Foundation and Fidelity Bank are providing invaluable support service described by Pitan as “well-rounded product that speaks to the financial and capacity development needs of the members and executives of LEPMAAS.”

It is recalled that BoI recently secured a $750m (N250bn) facility from 16 financial institutions to fund the Micro, Small and Medium Enterprises sector of the economy. The loan was syndicated by the African Export-Import Bank, Afrexim, and financed by 16 lenders including the Afrexim, the ECOWAS Bank for Investment and Development and British Arab Commercial Bank Plc. The deal is the outcome of a strategic corporate plan to enable the bank meets its obligations and aspirations. The big idea is to raise a N1 trillion loan facility, locally and abroad, to part-finance the industrial component of the Federal Government’s Economic Recovery and Growth Plan.

The gesture extended to BoI is the single largest syndicated facility to be received by a development finance institution in Nigeria. Pitan had expressed confidence on the bank’s capacity to effectively utilize the fund for its purpose even as he promised financial lifeblood for local enterprises for a period of between five and seven years as BoI seeks to bridge the funding gap for MSMEs, estimated at N704bn.“The idea is to support industries. This package will enable us loan additional N250bn to willing and able entrepreneurs in the industrial sector,’ said Pitan, who also disclosed that the bank will target enterprises in the creative industry, manufacturing and gender-based businesses. The ultimate objective is to act as a catalyst in creating wealth for small and medium enterprises, create new jobs and thereby drive down the unemployment rate in the country

Excerpted from The Guardian report

Source: News Express

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