• Friday, February 23, 2024
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BoI enumerates access to finance requirements for MSMEs


Micro, small and medium scale enterprises (MSME) operators in the agro-processing industry who wish to have access to finance should no longer despair as the Bank of Industry (BoI) has outlined general and specific requirements for accessing the newly launched Cottage Agro Processing (CAP) Fund.

BoI had recently launched the N5 billion CAP Fund with a view to ensuring that small- and medium-scale industries at the low-technology and labour-intensive end of the spectrum have access to finance at nine percent interest rate. The Fund is targeted at providing loans to players in the industry 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.

Rasheed Olaoluwa, managing director/ chief executive officer, BoI, enumerated them during the launch of CAP Fund on Thursday in Lagos.

According to him, the general requirements for accessing loans in the development bank include having a well-articulated business model, which should have about four sections. The first and second requirements require that the BoI know the business plan the applicant offers and his / her target market. Third, the applicant must convince the bank of his/her value composition, that is, why people should buy his /her product(s).

Lastly, the applicant should be able to say how he/she intends to create the value proposition, Olaoluwa said.

In terms of specific requirements, the BoI boss said the applicant must have a product he/she wants to process into a finished or intermediate state available in Nigeria, while the product  must be available in a large quantity. Again, the applicant should have located factories where raw materials are available and will identify with the equipment supplier certified by BoI.

Furthermore, the applicant must be able to articulate personnel requirements and identify markets for the products he/she wants to sell.

“A lot of applications that come to BoI do not meet the standards,” said the BoI boss, while explaining why applicants need to take full advantage of the scheme to improve their lives and the economy.

In order to cut down on the rate at which applications are rejected and ensure that applicants’ business plans meet the standards, the development bank is also coming up with the Business Support Fund (BSF), involving individuals who themselves are experienced in finance and articulation of business plans.

“The BSFs will receive applications from SMEs, look at them and then help repackage them so that by the time they get to BoI,  they would have met the criteria of a bankable application.,” Olaoluwa said in an earlier statement.

The BoI boss further said that banks that will be involved in this scheme are only those that have been certified as SME-friendly banks.

He added that the projects to be financed through this scheme will be located close to the source of the agricultural products to be processed, while the business plan must address both the primary and secondary sources of energy to power the plant. Again,  the equipment supplier will be go through accreditation by the development bank and will provide a performance bond as well as enter into a maintenance agreement.