Olasupo Olusi (PhD) is a distinguished economist and seasoned development finance expert with over a two-decade career dedicated to shaping economic policies, fostering fiscal sustainability, and driving private and financial sector development on a global scale. Currently the Managing Director and CEO of the Bank of Industry, Olusi brings a wealth of expertise honed through his extensive tenure with prestigious institutions such as the World Bank and the International Finance Corporation (IFC). His illustrious career began at the World Bank, where he significantly contributed to capital markets reform and conducted ground-breaking research on finance and private sector development in the Middle East and North Africa. Over the years, he has assumed pivotal roles, including as a World Bank Country Economist for many countries, Economic Adviser to Ngozi Okonjo-Iweala, the then Minister of Finance and Coordinating Minister of Economy, and Senior Private Sector Specialist at the International Finance Corporation (IFC). Olusi played a pivotal role in delivering the World Bank Group’s inaugural comprehensive assessment of Nigeria’s private sector in 2020. In his current role as the MD/CEO of the Bank of Industry, he is steering the organisation towards transformative and competitive economic endeavours, leveraging his profound understanding of macroeconomic dynamics, leadership knowledge, and management skills.
In this exclusive interview, his first since his assumption of office, Olusi shares his vision for the BOI and maintains that Nigeria’s enterprises need cheap, long-term financing, capacity building, and a good business environment to thrive. He spoke to Onyinye Nwachukwu, BusinessDay’s Abuja Bureau.
It’s been six months into your tenure as the MD/CEO of the Bank of Industry (BOI); how has it been so far?
My appointment as the MD/CEO of the Bank of Industry comes with a huge responsibility, but the journey has been great so far, and I am very proud to be trusted with this position. The industry is currently experiencing a few challenges in development financing, not only in Nigeria but globally, and the opportunity to create an impact means that my expertise is valuable in addressing some of these issues. I appreciate the opportunity to serve the country, and I am really looking forward to making a difference in the DFI space. Since I assumed office, my priority has been to understand the landscape, identify what can be done better, and how we can efficiently engage with our critical stakeholders. A key learning curve for me is that our stakeholders are what drive our business. So far, the bank has achieved some significant milestones, and I am hoping to continue this trajectory to improve our overall operational efficiency and the larger impact this will have on our economy.
What’s your vision as MD/CEO, Bank of Industry?
We have a unique model, and as you may be aware, the Central Bank of Nigeria is scaling down on its intervention programs. This means that as the Bank of Industry, we have a huge responsibility to provide cheaper and longer-term funding to businesses. At the moment, we envisage a significant increase in the demand for our financing, and we are intensifying our collaborative efforts to meet these demands. We work with commercial banks, who act as a backstop for much of our lending and provide guarantees that allow us to continue to intermediate efficiently within the market. In terms of vision, our goal is to increase the volume of our business and create other opportunities for financing within the economy, especially now that demand is high. We no longer rely on the usual lines of credit but explore other types of financial instruments that can help deliver credit downstream.
We are already identifying new opportunities for raising finance internationally to be able to meet local private sector financing demands. Aside from the lines of credit that we are exploring internationally, we are also looking at loan syndications, bond issuances, and good credit guarantee arrangements. When it comes to our downstream financing activities, we are prioritising improving and expanding our scope. With this, we understand that we may need to deploy partial risk guarantee schemes to ensure that commercial banks take on more volumes of our business.
With your impressive background in development financing, how would you assess the MSME landscape in Nigeria?
First of all, the Bank of Industry as an institution does not only support MSMEs (micro, small, and medium enterprises); our portfolio is significantly dominated by large companies. Nonetheless, we provide an extensive amount of support for MSMEs, and over the last five years, we have supported at least 4 million of them in the country.
As you know, MSMEs account for up to 40–50 percent of our job creation, which reflects a lot on the economic activity that impacts our GDP. However, most of these MSMEs still rely on the informal sector, which influences how we assess their contribution to economic growth. Despite this, they form the bedrock of economic activity, and it is very important that we continue to ensure that they are developed and well financed. We understand that there is still a lot we can achieve with them; a lot of progress has been made, but more needs to be done. What is important right now is how we build on our existing successes to achieve our next level of economic growth.
MSMEs play a role in economic development, like you alluded to, but it seems we are yet to feel their desired impact. Why is that, and how will the BOI under your management make a difference?
It’s not just about financing. Financing needs to be complemented with advisory services, capacity building, and different measures that can help mitigate the risks of doing business. This is how we mitigate the risks of many of the enterprises that we support. At the policy level, a lot of interventions are required to help improve the ease of doing business in Nigeria, whether through infrastructure provision or tax policies and administration to aid their role in the formal sector. There are also government regulations within various sectors that may constrain business activity. A lot is required to get the right results for MSMEs, whether at the policy, operational, or financing levels. Like I said, capacity building is a key focus for us, particularly for MSME, to help them manage their operating risks. Introducing shared facilities for operations, including industrial parks dedicated to them alone, and several other initiatives can really help them share and manage risks better and deliver good results for the economy.
What role can the Bank of Industry play across the policy space to enhance some of these recommendations you have shared?
We are making progress, leveraging some of the work being implemented by the presidency, such as making it easier for people to pay taxes through the reforms of the tax and revenue system. President Bola Ahmed Tinubu is also a pro-private sector president, and what that has given us is the confidence to play our part. We are an advocacy bank, a policy bank, so wherever we see the need for policy changes, we escalate to the policymakers and constantly engage with industry players. Since I assumed this role, I have met with CEOs of deposit money banks across the country, and we have had extensive conversations on what it entails both at the policy and implementation levels to ensure that we work more collaboratively and also deliver credit to the private sector. It is very important that we continue to have these kinds of engagements. We also had an engagement with the IFC (International Finance Corporation), where we identified several policy areas that needed reform. We have escalated some of these insights to the various critical stakeholders in the policy space so they can be addressed.
What are the real plans to source international funding?
We intend to raise about $8 billion over the next four years, which translates to about $2 billion every year. This is because we understand that the Nigerian economy needs that kind of funding—longer-term money with cheaper interest rates. We are hoping that our upstream financing activities, which involve some international development partners and international banks, will serve as a key enabler of our plans. I have also visited a few countries in the Middle East and the United Kingdom for conversations around our fundraising with many of our international partners. Some of them are already creditors and holders of our bonds; they have expressed an appetite to continue to invest in Nigeria and the Bank of Industry. In addition, we are exploring new partnerships with DFIs like the IFC and US Exim Bank. We recently signed a memorandum of understanding with USEXIM, which established a framework for our partnership. The MoU specified the application of various financial instruments as well as critical sectors of engagement.
For this funding, what interest rates are you looking at?
We are still in discussions and will let you know of outcomes at the appropriate time.
Corporate governance is critical to BOI’s mandate. How solid is this? How do you ensure that loans achieve the intended outcomes and that NPLs are substantially kept low?
What is important from our risk management point of view is to continuously improve the kind of de-risking instruments that we get so as to continue to intermediate in the economy and provide enterprises with long-term funding. Our model has been successful; we have a mechanism where our loans are backed by commercial banks, legal mortgages, Treasury bills, and so on. We are also looking at other models that will involve partial risk guarantees offered by several international partners that are already working in that space. What those partial risk guarantees do is help, such that when we lend, these international institutions will also back us up in a way that we are not overexposed, and, in the event of default, they will take the first loss and we will continue our lending activities. We are looking at those kinds of insurance mechanisms, including the partial risk guarantee mechanism, project co-financing arrangements, co-lending, and syndications, that can help deal with direct projects, not just our entire portfolio. We are also working out how to partner with big corporations and strong brands that have very strong risk management procedures, where we can take out credit without the need for bank guarantees. There are a number of initiatives that we hope to deploy within the private sector very soon.
In terms of the tightened interest rate environment we have now, is there any plan to re-price BOI loans? Do you fear a possible loan default and consequent rise in NPLs?
As of Q4 2023, the bank’s NPL rate dropped significantly to 1.96% when compared to 3.79 percent in Q4 2022, despite the challenging economic landscape. The substantial reduction in the NPLs reflects our commitment to prudent lending practices, proactive risk monitoring, and timely resolution of non-performing assets. As a Development Finance Institution (DFI), we understand the importance of affordability for industrial transformation; as such, we continuously strive to offer our customers competitively priced loans that support their growth. While the inherent risk of loan defaults exists, the Bank of Industry remains vigilant. We actively manage risks to maintain a strong financial position, allowing us to support our customers and the industrial sector effectively.
The government seems increasingly concerned about climate-related issues. How does the BOI intend to leverage this space?
The issues around climate mitigation and adaptation are developmental issues, and it is important that a DFI like us play big in that space. No other bank or institution is set up to deliver the long-term financing that is needed for climate adaptation in our country, especially at cheaper interest rates like we do. Having said that, climate and sustainability financing are two of the six thematic areas that we are very interested in to drive overall economic development. Other areas include gender development; digital transformation; youth and skills; MSMEs; and infrastructure. All these areas are critical; however, climate and sustainability remain two of the most important. For us, we need to ensure that internally we are ready to deliver results on climate mitigation and adaptation and the required financing. We have already set up an ESG framework based on international standards. We are also undergoing the process of compliance with the adaptation fund and the Global Climate Fund. This is for us to be better placed to access funds that are available globally; about $200 billion is available for climate finance-related projects, and we believe that we can attract some of that to Nigeria. In addition, we have renewable energy projects that need financing, as well as a lot of mitigation and adaptation projects that we need to deliver on.
We are also mindful that for us to be able to do energy or climate financing, we must be ready. On that note, we are working on our standards, putting in place the framework within our institution to make us internationally compliant, and attracting good financing. We are preparing internally, and our certifications are ready. Last year, the French development agency (FDA) gave us some funding—about 100 million euros to date. This has enabled us to finance so many projects in that space already. Our goal is to expand it, and like I mentioned earlier, our target is to attract existing Global Sustainability Funds.
Tell us more about some of your financial products and how they can be accessed.
We have lines of credit for equipment financing and for working capital. We believe that those are critical instruments that are needed by the private sector. Our value proposition at BOI is that these instruments are available at low interest rates, a lot lower than the markets and in single digits, although our working capital loans tend to be slightly higher. In terms of tenure, we are able to do three years, when compared to commercial banks, which offer two years. In the near future, we hope to improve our offerings. We are currently making several arrangements.
Earlier in the year, you signed a MOU with the Ministry of Industry, Trade, and Investment for a N200bn financing intervention for nano businesses, SMEs, and manufacturers. What does this seek to achieve, and what are the modalities for disbursement?
The MOU with the Federal Ministry of Industry, Trade, and Investment, which is our supervisory ministry, is to deliver three projects. Mind you, part of our mandate as BOI is to be an implementation agency for several government initiatives. The N200 billion palliative programme for enterprises is to help mitigate some of the financing challenges that Nigerian businesses currently face. The fund has three components: the first is a grant scheme of about N50 billion, with which we will deliver credits of up to N50, 000 each to nano enterprises across the country. Our initial plan is for a minimum of 1,000 in each local government to ensure a good geographical spread.
The second programme is a N75 billion MSME programme that will also deliver credit across the country, but with a slightly higher limit. We are hoping that under this arrangement, we will disburse up to N1 million to several enterprises across the country, and we will also ensure a solid geopolitical spread and balance in the distribution. Also, the conditions for accessing this are not as stringent as what is obtainable with our regular loans. The third component is the N75 billion for large manufacturing enterprises that will deliver a single obligation limit of about N1 billion each to benefit large enterprises. Our expectation is that these enterprises are already involved in the manufacturing space, and this funding is to help them sustain their business and possibly expand. However, this component will follow the usual BOI lending procedure but will help deliver much-needed liquidity and credit to our industrial sector.
What is the progress with the disbursement so far? What are the criteria for selecting beneficiaries?
Through the application portal managed by the Federal Ministry of Industry, Trade, and Investment, we have seen a lot of interest in loan applications submitted. These applications are being processed, and we are in touch with each applicant who has successfully met the eligibility criteria. For the nano businesses that are already ongoing, the criteria include that applicants must be willing to register a business name as their businesses grow and employ at least one additional staff member as the business turnover increases. They must also submit proof of a residential or business address in the local government area where the business is located. In addition, to ensure transparency and accountability, BOI has put in place a robust system to verify the beneficiaries, which includes the use of a national identity number (NIN), a bank verification number (BVN), and bank account statements to ensure that the details match the NIN and BVN. This verification process ensures that each beneficiary is unique and there is no duplication. The bank will also take an additional step to enumerate beneficiaries in each state. During enumeration, the applicant’s information is re-verified, including a live picture of the beneficiary.
For nano businesses, these grants are not to be repaid, like I explained earlier. The applicants who have been selected by the Federal Ministry of Industry, Trade, and Investment go through a rigorous verification process. For the loan programmes, the eligibility criteria require that existing businesses have been in operation for one (1) year. They will be required to submit registration documents and business plans. Start-up businesses are also encouraged to apply for MSME loans. Other conditions, including the target sectors, can be found on the website www.fedgrantandloan.gov.ng. In addition, the federal government has designed the loans in such a way that repayment is very convenient for the beneficiaries. The MSME loans are expected to be paid back over 3 years, while the SME manufacturing loans are paid back over 5 years for asset financing and 3 years for working capital facilities. Both loan products (MSME and SME manufacturing facility lines) attract a 3-month and 6-month moratorium period, respectively. The interest rate is charged at an all-in rate of 9 percent per year for both facilities.
Like the grants, all loan applications are verified by the Federal Ministry of Industry, Trade, and Investment. The applications are evaluated against the eligibility requirements stated for each loan. In addition, all loan applicants are visited to understand the peculiarities of their businesses. This process is particularly important to ensure that facilities are aligned with the needs of the business. Our team of experts and project officers will collaborate closely with the beneficiaries before and after disbursement. We will continue to support the operations of the loan beneficiaries post-disbursement through our monitoring mechanisms. This will help guarantee prompt loan repayment and the identification of potential issues that may arise during the term of the loan. It is our expectation that the loans provided to the beneficiaries will support their business growth and, in turn, contribute to the nation’s GDP and overall economic development.
There is the possibility to see the intervention as ‘National Cake’; can you clarify if beneficiaries are required to pay back?
The N50 billion grant component of the programme is a conditional cash transfer programme, and only people who meet the set criteria can benefit. Yes, it is a grant, but it’s not essentially free money because you must meet the conditionalities attached. The grants will not be repaid. That said, the others are loans that are going to be repaid and will follow some of our normal credit processes. BOI has a long history of supporting government intervention programmes, and we have many beneficiaries who can attest to this.
What is the application process, and how can businesses apply?
Applications can be made on the website, www.fedgrantandloan.gov.ng. The website has detailed information on the eligibility requirements and frequently asked questions to guide applicants. Further information can also be sourced from any of the BOI state and regional offices nationwide.
How do you manage interested applicants who may not be educated enough but genuinely need these interventions?
We support enterprises in several ways. Our consultants who go on the field verify many of these enterprises. That way, we are not necessarily supporting just enterprises on our platform, which is basically used for our processing. We are working with other federal government and state policymakers, particularly with the Ministry of Industry, Trade, and Investment, to help identify some of those beneficiaries who are not digitally savvy but have a genuine business need, to deliver some of the credit and grant.
How does the BOI ensure transparency in its lending, and what structures do you intend to put in place to make it better?
We strictly adhere to the conditions of the MOU that was signed, which lays out the criteria for accessing grants and any kind of credit that will be given under the government’s palliative programme. Our processes are compliant with international best practices because we understand the need to conform, which has propelled the growth we see today as a financial institution.
What other ideas and initiatives have you introduced as the CEO of BOI?
We are 100 percent committed to delivering financing and business advisory services to the critical stakeholders of Nigeria’s private sector through different product offerings. We are thinking more about equity and many other products that we can introduce. We have a subsidiary, the leasing company of Nigeria, which we are planning to recapitalize to enable it to deliver credit to those whose operating or financing requirements are more suited to the leasing sector. We are also supporting MSMEs with capacity development, as well as many other products and processes that we will be introducing to drive efficiency. The Nigerian public can trust us to deliver some of these soon.
What is the status of the BOI portfolio? Do you think that it needs some kind of recapitalisation?
Our portfolio is solid, we are doing very well, and we are positioning ourselves to attract more funding. Our shareholder fund is over N700 billion. This means that we can leverage that in a few multiples to raise additional financing. We are not desperate to recapitalize but more interested in continuing to build a solid base. Our non-performing loans are very low, and we will continue to deliver credit. Overall, we are a solid bank with assets of over N4 trillion.
What is BOI’s current credit rating?
BOI is rated triple A domestically by Agusto & Co. Limited and others, which are very strong, but internationally, the recent downturn in the economy, which impacted our sovereign rating, also affected us and dropped our rating slightly. Nonetheless, we are still a very solid bank, and all our investors and creditors understand this.
Don’t you think this downgrade may jeopardise your plan to raise money offshore?
It may not directly impact our ability to source money, but it may affect pricing. However, we are engaging with various international institutions that offer various tools for de-risking, and we are confident that we will be able to raise different kinds of funding at low costs.
