The Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) have launched the Nigerian Content Intervention Fund (NCI Fund) with $100m (Hundred Million Dollars).
This move is a major step geared to address the paucity of funding and inability to access credit, which often besets manufacturers, service providers and other key players in the Nigerian oil and gas industry.
The pool of funds will be managed by the BOI, which would 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.
Speaking at the formal launch and MoU signing ceremony of the NCI Fund in Lagos, Patrick Daziba Obah, the acting executive secretary of the NCDMB, 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 the experience of the Bank of Industry in Development Financing, adding that “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.”
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 constructions and acquisition of marine vessels.
Speaking further, Obah listed the revised features of the NCI Fund to include compliance with the Treasury Single Account policy of the Federal Government, on-lending to beneficiaries, 8 per cent interest rate, long tenure of up to 10 years, single obligor limit of $10 Million and varied application which can include manufacturing, asset ownership etc.
He assured that transactions that were consummated under the partial guarantee arrangement will be managed to final settlement and promised that the board will continue to work with stakeholders to develop financial products that address other unique financial requirements of interest of Nigerian Oil and Gas Service Providers (NOSPs).
The NCI Fund is sourced from the Nigerian Content Development Fund (NCDF), which is funded from 1% that is deducted from the value of all upstream contracts. The NCDF is underpinned by Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act which provided that the funds be used for developing capacity in the oil and gas industry. About $600m has accumulated in the NCDF till date.
Waheed Olagunju, acting managing director of BoI in his address, 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 that limited the success of the NCDF and ensure that qualified service companies access the funds they need to grow capacity.
OLUSOLA BELLO
