The Nigerian Content Development and Monitoring Board (NCDMB) and Bank of Industry have launched a $50 million fund for manufacturing equipment components used in the oil and gas industry and linkage sectors.
According to a statement by NCDMB, the fund, which is for the Nigerian Oil and Gas Park Scheme (NOGAPS) Manufacturing Product Line, will incentivise companies that would operate in the Nigerian Oil and Gas Parks.
Speaking at the signing, Simbi Wabote, executive secretary of NCDMB, said the fund would support oil and gas companies operating in the oil and gas parks developed by the Board in Bayelsa and Cross River State.
He said the fund will only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shopfloor within the park.
Wabote added that the NOGAPs Manufacturing Fund differs from the initial $300m fund being managed by BOI with five product lines aiming to support Nigerian businesses that contribute their one percent to the Nigerian Content Development Fund.
“The new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure,” Wabote said last Wednesday.
“The decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the Endeavor, in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.”
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On the criteria for accessing the NOGAPS manufacturing funds, the executive secretary said that, unlike Nigerian Content Intervention Funds, which requires companies to be contributors before they can benefit, the NOGAPS fund can be accessed by companies that will be domiciled and will manufacture their products within the parks.
He said: “The Fund will provide loans to Nigerian companies that meet the criteria to operate in any designated NOGAPS Industrial Park for financing manufacturing activities, purchase of fixed assets, working capital and logistics.
“Beneficiaries will get a maximum single obligor of $3 million and minimum of the single obligor of $250,000.00 with one year moratorium repayable within five years at five percent interest per annum.”
On the incentives available in the NOGAPS park, Wabote said that the rate for accommodation is reduced, power is guaranteed, and the rent will only begin to count when the company commences manufacturing.
In his remarks, Olukayode Pitan, managing director, Bank of Industry said the Board for being a partner in progress. He noted that the fund will further help promote in-country manufacturing as well as the creation of employment.
Pitan said that the interest rate will help companies easily access the product and pay it back. The interest rates are very good, just like the initial fund, which is less than ten percent and the same thing will apply to this one. All we are looking for are Nigerians who want to manufacture in Nigeria.
He charged Nigerian companies to harness the opportunity to pick up space within the park to produce locally.
According to the statement by NCDMB, the Board established the NCI Fund in 2018 with the purpose of financing Oil and Gas companies to increase capacity and grow Nigerian Content in the Industry Presently, the NCI Fund has five product lines which are being managed by the Bank of Industry.
“They include – Manufacturing Finance -$10m; Asset Acquisition Finance -$10m; Contract Finance -$5m; Loan Refinance -$10m and Community Contractor Finance – N20 million,” it said.
“The Board also has a US$30 million Working Capital Fund for oil and gas service companies and $20 million for Women in Oil and Gas Intervention Fund. The last two facilities are administered by the Nexim Nigerian Export-Import Bank and the agreements were signed in mid-2021.”
On the sideline of the event, the two chief Executives signed a supplementary memorandum of understanding for the $300m Nigerian Content Intervention Fund for extension of the agreement
