BoI Supports Made-In-Aba Leather Products

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 the disbursement of N400m to 300 new target beneficiaries and all members of the cluster will be handled by Fidelity Bank. The package was designed to 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. 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 loan from BoI is at a very low interest rate 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 a low interest rate, non-collateralised 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 said.For the hardworking 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.”Specifically, the Ford Foundation, already pursuing an advocacy agenda in the Aba cluster region, the foundation will be providing a grant that focuses on strengthening the capacities of the leaders and beneficiaries in the cluster even as it erects monitoring structures to ensure loan repayments. Fidelity Bank will provide account management services to the loan beneficiaries. A fully furnished secretariat to support the governance activities of the LEPMAAS executives was commissioned shortly after cheques were distributed to loan beneficiaries who successful passed the litmus test of BOI’s evaluation process.Pitan promised that the bank was keen in growing the size of beneficiaries from the increasing number of applications endorsed by the LEPMAAS leadership even as he advised beneficiaries to be diligent in the repayment of their loans to ensure the sustainability of the scheme.He had kind words for Governor Ikpeazu, the champion of “Made in Aba” revolution, for his keen interest and support for the scheme, while promising that BoI will continue to focus on the growth and development of the Aba Finished Leather Goods cluster through initiatives that promote the Aba brand both locally and globally.Aba is an industrial hub not only in Nigeria but the entire West-African sub-region. Entrepreneurial activities in the city revolve mainly around finished leather and garment works. But business clusters have emerged as entrepreneurs strive to build synergy with similar businesses and link up with customers and support institutions.BoI recently secured a $750million (N250billion) facility from 16 financial institutions to fund the Micro, Small and Medium Enterprises (SMEs) 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 utilise the fund for its purpose even as he promised financial life blood for local enterprises for a period of between five and seven years as BoI seeks to bridge the funding gap for MSMEs, estimated at N704billion.“The idea is to support industries. This package will enable us loan additional N250billion to the willing and able entrepreneurs in the industrial sector’’.  Pitan 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 (SMEs), create new jobs and thereby drive down unemployment rate in the country.Source: This Day