As a witness to the recent December public hearing organized by the Senate committee on Banking and Finance, I bear testimony that the proposed National Development Bank of Nigeria (NDBN) Bill ostensibly to provide low-cost loans to small and medium enterprises is a poorly articulated diversionary bill. What is needed is to strengthen the existing Bank of industry (BOI). At a time some Development Finance Institutions are non-performing, why reinventing new moribund “development” wheels? Entitled: ‘A Bill for an Act to establish the National Development Bank of Nigeria, 2015’, sponsored by Senator Ibrahim Gobir, the bill, which has passed second reading, was poorly articulated with faulty assumptions about low interest rate determination and funding from a federal government groaning under the weight of budget deficit financing. No wonder, most stakeholders queried its timing and its outworn objectives.
Ajayi Kadir, Acting Director General of the Manufacturers Association of Nigeria rightly observed that; “There is no service said to be offered by the proposed National Development Bank of Nigeria which is not currently being performed very well by the BoI”. In the same vein, President Manufacturers Association of Nigeria (MAN), Dr. Frank Udemba Jacobs, said: “MAN is taken aback by the introduction of the Bill which seeks to repeal the BOI Act and establish the National Development Bank of Nigeria (NDBN) in its place. We are concerned about the prospects of changing the status of BOI as we know it today for the following reasons: BOI has been functioning and delivering on its mandates within the available funding capacity.”
According to him, instead of concentrating efforts on the establishment of this proposed Bank, the National Assembly should assist the Executive in making operational the Development Bank of Nigeria established by the last administration in March, 2015. Certainly Bank of Industry (BOI) is much older than its repositioned status date. BOI was reconstructed in 2001 out of the moribund Nigerian Industrial Development Bank (NIDB) Limited. NIDB was incorporated in 1964. It was part of the developmentalist Nigeria’s financial architecture of post independent Nigeria.
When the history of Nigeria’s remarkable success story of the first two decades after independence is written, the role of old NIDB (with all its corporate governance fallings), through long term cheaper funding for industrial development must occupy a special chapter. It is right to say that BOI “is Nigeria’s oldest, largest and most successful development financing institution”. Its authorized share capital was initially set at N50 billion, but in the wake of NIDB’s restructuring into the current BOI in 2001, it has been increased to N250 billion to reposition the bank “to address the nation’s rising economic profile in line with its mandate”.
Following a successful institutional, operational and financial restructuring programme embarked upon in 2002, the bank “has transformed into an efficient, focused and profitable institution …well placed to effectively carry out its primary mandate of providing long term financing to the industrial sector of the Nigerian economy”. The strength of BOI is its activist corporate governance under the dynamic leadership. With its formidable corporate team, BOI is truly re-industrializing the country just as the old NIDB industrialized hitherto agrarian Nigeria economy emerging from British colonial underdevelopment. In 2007 the then largest textile mill in West Africa; United Nigeria Textile Company (UNTL) in Kaduna, a company with billions of Naira investment and thousands of employees closed down. Many thanks to the resolve of the then Vice President, Arc Namadi Sambo, President Goodluck Jonathan’s administration finally endorsed the intervention fund under the cotton/textile revival plan. The new deal was to revolutionalize funding for the real sector and breadth life into the ailing industries. The deal worked out by the CBN and BOI covered lending and re-refinancing of projects, restructuring of existing portfolios to manufacturers and support for investment in industrial clusters power supply. The sudden “resurrection” (as it were), of UNT Plc. after three years of closure (with close to 1,500 direct jobs currently) is premised on the realization of this cocktail of measures pushed by BOI, CBN and government. It can therefore be said that BOI in line with its motto; is “transforming Nigeria’s industrial sector”. The Acting Managing Director, BoI, Waheed Olagunju, while speaking at the public hearing in the Senate last week made known the good performance of the BOI as a Development finance institution. Witness him: “In 2004-5, we turned blue with a profit of N105million, but by 2006, we made a profit of N1.3billion. By 2007, it went up to N1.8billion and it has been in billions since then. Last year, the operating profit, excluding exceptional item, was about N12billion. As of this year, our half-year financials shows that we are more profitable in 2016 than we were in 2015.”
We must build a sustainable institution, not undermining it through legislative bill overload. BOI’s achievements are indeed significant. But they all add up to a drop in the sea of industrial needs of Nigeria. With industry and manufacturing contributing miserably less than 4 per cent to the country’s GDP and with paucity of long term funding as one of the critical success factors, there is need to further elevate the BOI beyond ordinary. President Buhari’s change agenda comes to grief without re-industrialization and after power supply (electricity) the most critical issue in re-indurtialization is long term cheaper financing. The advantages of re- industrialization for Nigeria include lessening of dependency on imports, thus saving scarce foreign exchange. Where the economy is diversified, industrialization serves as a source of foreign exchange. It also serves as a source of mass sustainable decent employment for greater number of the population and invariably reduces income poverty. It is therefore refreshing to read in 2017 budget speech that President Muhammed Buhari favoured the recapitalization of the Bank of Industry, BoI.
The challenge is to make sure that Bank of Industry (BOI) is sufficiently financed to make cheaper funds available to industries that are willing to modernize with clear cut performance criteria that include labour absorption and job retention. National Assembly must therefore appropriate more funds for the Bank not reinventing another wasteful bureaucracy in the garb of another development finance institution.