How Loan Applicants Can Access N5bn CAP Fund — Boi

The Bank of Industry, BOI, weekend, launched N5 billion Cottage Agro Processing (CAP) Fund.Mr. Rasheed Olaoluwa, the Managing Director of the bank, said that existing operators in the sector as well as prospective young Nigerians who want to go into farming can take advantage of the fund to establish mini mills for processing agro products such as cassava, cashew, oil palm, rice paddy, groundnut, yam, maize and sorghum, etc.

Cassava farm

According to him, for applicants to qualify for the loan, they must meet both the generic and specific requirements as stipulated by the bank. “For me I think for any applicant to access the loan, let me first of all mention the generic requirements before the specific ones.

The generic requirements are that when you are applying for loans at BOI, you must clearly articulate your business model.

The business model should answer the following four questions: what is the product you are offering, what is your target market; who are you going to sell this product to and why should anybody buy your product because there are a lot of such products in the market, so why should anybody buy it?

How are you going to create the product to ensure that it actually comes out? For me, if you can articulate those issues, I think we have a basis for very interesting discussion. So, that is generic.

“The general requirements are that this particular fund is for agro products; that means you must have a processing factory that processes crop into food products or intermediate raw materials for industries.

The agreed product must be available in sufficient quantity; we are not looking at a massive transport cost, so we expect that you locate your factory very close to where the raw materials are available so that your transport cost is minimal.

“We expect that you identify an equipment supplier that is accredited by BOI and we expect that you articulate personnel requirements that are within the limit of your budget; we expect that you identify some market for the product you want to sell. These are basic elements of business model that we expect you to do.

“For people who may not be able to do this, we are appointing business services development firms to help. They will provide the services that are almost next to nothing to the applicants.

It will ensure their chance of success at the BOI. Right now a lot of applications that come to BOI don’t meet standard. What we want to do is to increase the success rate of loan applications that come to us, especially from the SMEs.”

He further explained that it is a direct intervention fund by BOI, adding , “the only involvement by commercial banks will be limited to what we called the SMEs friendly banks to able to participate in the working capital components of the loan. The working capital component is only 10 percent.

We have a list of commercial banks that we have identified; we had meetings with them and they have agreed to. The SMEs stakeholders like NASME, have agreed with the list of the banks and if those banks are interested in providing the 10 percent working capita we will go ahead with them but if they are not, BOI is prepared to do that directly.

On equipment suppliers, he said “the applicant is not at liberty to bring just any equipment supplier of his choice; we have people that have been certified and if you want to bring in new equipment supplier, it will also go through a process of certification to ensure that they can supply the right equipment that can actually process the agric product to food products or ultimate raw materials for industries.

Also, we are going to have a performance Bond and they are going to give us a warranty and sign a mainta\enance agreement. The kind of things that have gone wrong in the past we want to to make sure they don’t happen this time around. So the equipment is well fabricated, well installed it is likely to perform. Now ,if the unlikely event any of the equipment suppliers disappoint, we will black list such suppliers and they will not tbe entitltle to participate in this programme.

I must say the Federal Institute of Industrial Research, Oshodi, is going to play a major role in working with us on this project becausae I visited FIIRO recently and clearly they have developed a number of very interesting technologies that are dedicated towards agro processing but those technologies have not been promoted widely.

A few Nigerian businessmen and women have gone to FIIRO and have taken these technologies and they have turned their small business to very large business today; some of them are doing hundred millions of naira in turnover today. So we have FIIRO as a major partner under this product.”