The fund is targeted at the small-and medium-scale industries at the low-technology, labour-intensive end of the spectrum and is expected to finance about 1000 projects at nine percent interest charges, while creating about 20,000 direct and indirect jobs, BusinessDay has learnt.
Rasheed Olaoluwa, managing director/chief executive officer, BoI, said the CAP Fund would provide loans to beneficiaries to establish small scale plants or mini mills to process Nigeria’s agricultural products such as cassava, oil palm, plantain, cashew, hides and skin, chicken and fish and paddy rice, among others.
According to him, the projects to be financed will be located close to the source of the agricultural products to be processed, adding that the business plan must address both the primary and secondary sources of energy to power the plant, while the equipment supplier will go through accreditation by the development bank and will provide a performance bond and enter into a maintenance agreement.
“The loans will be granted at a single digit interest rate of nine percent per annum and total management fee of one percent. The tenor is five years with a moratorium of six months,” said Olaoluwa.
Some African countries are beginning to record appreciable successes in the agro processing sub-sector. Ethiopia is making strides in processing hides and skins into leather shoes. Currently, up to 10,000 pairs of shoes are churned out of Huajian Shoe Factory every day and are sold by the biggest names in fashion all over the world, including firms like Tommy Hilfiger. The country exports of shoes under the African Growth and Opportunity Act (AGOA) was close to $7 million in 2012.
Similarly, the nuts served at the British Airways, often called ‘Out of Africa nuts, are processed and produced in Kenya. The Kenya Nuts Company, which produces them, employs more than 2,500 skilled personnel.
2013 data from the Nigerian Export Promotion Council (NEPC) revealed that total worth of Nigeria’s non-oil exports were $2.97 billion. However, the composition of the non-oil exports included mainly raw materials such as sheep, goat skin and leather, sesame seeds, rubber, cotton yarn, cashew nuts, edible nuts, prawns, shrimps, fish and crustaceans, among others.
This shows that Nigeria exports these raw materials to other countries which in turn use them at their factories and import them back in the form of finished products.
Experts, therefore, admonish value-addition to raw materials to enhance marketability and speed up inclusive growth.
“No country ever became economically strong by exporting raw materials to other countries,” says Olusegun Aganga, Nigeria’s minister of industry, trade and investment.