The Bank of Industry (BOI) Limited was established on October 2001, following the reconstruction of the Nigerian Industrial Development Bank Limited(NIDB). The bank provides financial assistance for the implementation of large, medium and small projects as well as the expansion, diversification and modernization of existing enterprises; and rehabilitation of ailing ones.
The Bank of Industry has a N90 million business development fund meant specifically for Women.
The bank manages this fund (BUDFOW) on behalf of the Federal Ministry of Women Affairs and Social Development (FMWASD), a ministry that provides soft loans to female entrepreneurs. This write-up focuses on this business development fund, BUDFOW, stressing how an enterprising female entrepreneur can take advantage of the opportunity it offers.
Why The Fund Is Specifically For Women
Mohammed says, “The terrain in which we operate in is a very difficult one and there are so many challenges. The men have been at it for quite a while so they can weather the storm but women need to be handled differently. They need to be handled with care; you need to understand where they are coming from. One needs to know the reasons behind what they want to do and what their aims and objectives are.
“If you have a female entrepreneur coming to meet a man, he might just assume that she’s okay in terms of being able to meet the challenges out there, but she might even have personal issues, issues that might probably affect the business she wants to run and a man might not have the time to listen to such issues. That is why the need to create a gender desk came up.
“At the gender desk we have men and we also have women, though it is being headed by a man. The way a woman would sit and handle a fellow woman is different from the way a man would handle it. He might not have the patience to listen to her personal issues and those personal issues count, but a fellow woman can quickly detect when there are personal issues and make her unburden her mind. And then she calms down and they would be able to counsel her. That is not to say men too can’t talk to women. The men also have the orientation of compassion, the listening ear”.
How Much Is Available
Mohammed says, “We would be talking about Business Development Fund for Women (BUDFOW). We are managing the fund for the Federal Ministry of Women Affairs because they provided that fund for women entrepreneurs. We got N90 million and we have exhausted the whole fund. As at today, we have disbursed about N165 million. So, you ask, where has the extra fund come from? It has come from repayments and interest from people who have benefitted. This is ploughed back so other people are able to benefit. Women entrepreneurs have good repayment record. It has been a good experience with them”.
Minimum And Maximum Amounts To Apply For
Mohammed says, “Minimum and maximum amount a woman can apply for depends on the kind of business she wants to run. Generally, we have micro credit which is estimated at N10 million and below. Anything under N10 million is regarded as micro in BOI. But that doesn’t mean everybody needs N10 million. Sometimes people need between N1.5 million and N2 million. So, we look at the business and what the business actually requires. Because BUDFOW is a limited fund, we would also not give one person N10 million or N5 million. So the kinds of projects we look at are projects that require not more than N2 million or N3 million”.
Other Requirements Asides Being A Woman
Mohammed says, “There are two categories. It is either you want to expand or you want to start afresh. If you want to expand, it is a must that you register your company and you must have a business premises. If it is a new business, you must have knowledge of that business born out of experience. It may be that you once worked at a place where that business was done or you want to employ someone who has experience and technical competence for that business. The most important thing is for you to understand what you want to do and also have passion for it. Don’t do it just because your friend is doing it and making money. If you follow that route you would certainly fail.
“You must love what you want to do. Even if you are producing a product whose raw material has an awful smell, you must love that smell because that is what you want to do and it is going to produce something beneficial to the society and also make money for you. Late Otunba Gadaffi (Inventor Mobile Toilet) said ‘Owo Igbe o kin run’ meaning, ‘Money made from shit (faeces) does not smell’. He also said ‘Shit business is a serious business’. That is the attitude one has to put into business.
“That is why we believe there must be capacity building for those who want to go into business. When we first started micro credit, we embarked on what we called booth camp workshop and entrepreneurial workshop. An entrepreneur must understand the reason for capacity building; he must understand the difference between revenue and profit. That’s why they need to do business banking; because most of these people don’t bank so all their profits get muddled up and at the end of the day, they wont be able to tell you how much they have made as profit”.
A reliable source from the gender desk of BOI in Lagos says, “The number one requirement for you to access loan in BOI is that your company must be duly registered; and you also must provide other necessary documents for business enterprises under matching funds. The following requirements where listed:
1. Formal Application.
2. Photocopy of Certificate of Registration (2 copies).
3. Business Plan (2 copies).
4. Quotations for the supply of items of machinery and equipment (one from the source used in the business plan and another from other sources).
5. Write-up on Technology, Manufacturing Processes, Technical Partners, if any and where not detailed in the business plan.
6. Sources and quotations for Raw Materials expressed in units.
7. Eight (8) passport sized photographs of the promoter (business owner).
8. A photocopy of the Current Tax Clearance Certificate of the Business Enterprise and the Promoter.
9. Photocopy of International Passport or Driver's License or National Identity Card of the Promoter.
10. Detailed profile of the Promoter and Key Management Staff (preferably Curriculum Vitae).
11. Bank Statement of the Business Enterprise for a period of one year (for existing business).
12. Declaration of Outstanding Liabilities to other Banks and Individuals.
13. Evidence of availability of collateral security (e.g., landed property, bank guarantee, individual guarantor etc).
Individual Guarantor's Requirements (where applicable):
1. Letter of intent to guarantee.
2. Means of identification...
3. Eight passport sized photographs.
4. Recent Bank Account Statement for one year.
5. Tax Clearance Certificate.
6. Profile of the Guarantor
Mohammed says, “For BUDFOW, it’s a long tenure of four years and it is given out at an interest rate of five percent”.
Do You Think Nigerians Are Aware Of The Bank And The Opportunities Therein?
Mohammed says, “We try as much as possible to disseminate information about what we do. We have television programmes that come up certain days of the week but because we know that not everyone has access to television, so the medium that we use which is very effective is radio. The people who don’t have television especially up North, have at least a transistor radio.
“We also run programmes. Sometimes we partner with state governments. We also do exhibitions. Sometimes, we also bring entrepreneurs from different parts of the state to sensitize them”.
The Application Process
Mohammed says, “Once you walk in, you would be directed to the Gender Desk. After discussing with you, you would get a checklist of requirements with which you assess yourself to see if you qualify for BUDFOW or not. After that, you get a questionnaire. The questionnaire asks you about yourself (Promoter) and the business; everything about the business; possible location, source of raw materials, equipment, markets, etc., because at the end of the day, it makes us understand the business you want to go into.
“We also have the issue of the Promoter not being literate; but literacy isn’t necessary the inability to speak English. Literacy is the ability to communicate effectively and also put something down. Some people might not be able to put it something down in writing but it is there in their head. So we engage them in discussion and put down their responses. So, at the end of the day, we have a business plan.
“The questionnaire is as good as your business plan because it contains all the critical information needed about your business. And it is this information that we use in developing our credit paper which we would now use in getting approval from management.
“We also guide people during the process of questioning. For example, when we ask you where you intend to get your raw materials, we already have an idea of how we can assist you because we have ideas on where to get what. We know that your raw material might be someone else’s finished product which we have information on. So, we just don’t leave loan seekers on their own; we try to assist them in every way we can because if their business fails, they lose money and we also lose money. If there is an exhibition, we take them out. And sometimes, we finance the travel and accommodation expenses.
“We go out and verify some of the information they have given us like their source of raw materials, address, etc. We also help them look for markets when they start selling their products. “Once they have started and are doing well, we don’t expect them to stay on that level; we intervene and assist them to grow from micro to small and from small to medium and from medium to large”.
Kinds Of Businesses Financed
Mohammed says, “We finance businesses that have value addition; in essence, manufacturing. We don’t finance trading”.
How Defaulters Are Handled Since There Is No Collateral
“Even if there is no collateral, there is a guarantee. The borrower guarantees herself and there are guarantors just like when you want to open an account with a commercial bank. So we have guarantors who vouch for them in the event of default and it works quite well.
“We have situations of people that are able but are unwilling to repay and we also have those that are unable but willing. We treat them differently. For the able but unwilling, they have the money but for those unwilling to pay, we go after them to be able to recover our money. In extreme cases, we get debt recovery agents to assist in the recovery”.
How To Know If A Guarantor Can Pay In Event Of A Default
Mohammed says, “There is a notarized statement of net worth and they are going to swear to an affidavit. After swearing in court, you then list what you are worth in terms of assets. So, if someone is worth N10 million, and he is guaranteeing someone for N2 million, there is no problem”.
How Long It Takes For Funds To Be Released To Qualified Applicants
Mohammed says, “Once all the paperwork has been done and the requirements met, it takes two days but we do not give cash. To avoid diversion, we pay for equipment and the money goes to the equipment supplier. Also, we just don’t send money to the supplier: he must have supplied the equipment, installed and test ran it and ensured that it is working; the borrower confirms that it is working; we also confirm before we then pay. If we give cash, it is very easy for the person to divert it for family issues or buy sub-standard equipment”.
Number Of Beneficiaries
Mohammed says, “We have 52 beneficiaries thus far under disbursement and some are still waiting for disbursement”.
How About Youth Empowerment?
Mohammed says, “The youth empowerment also takes the same procedure. Presently, we are even collaborating with the National Youth Service Corps through their Department of Skills Acquisition and Entrepreneurship Development. There is someone who served in Abuja; and during one of our sensitization workshops the fellow approached us, saying that he wanted to produce packaged garri. He called it Soakis-Wakis. He packaged garri, milk and sugar and there was another variant of it that was packaged with kilishi (a Hausa meat delicacy). And we financed his business. Before he started we took him for an exhibition. We also took him to NYSC Headquarters to meet the Director General and the DG instructed that NYSC must patronize him. So, already there is a market for him. So, what our MD decided to do for him is this: since the garri was packaged with sugar and milk, we talked to major manufacturers. We spoke to Dangote to supply him sugar at distributors’ price. We spoke to WAMCO to supply him milk at distributors’ price. So, that cut down his production cost. Then we had someone whom we funded his kilishi business and we linked them together. So, no matter the quantity he is buying, he buys at distributors’ price from all of them”.
If You Go To This Extent To Empower People, Why Then Don’t People Come To You?
Mohammed says, “The problem is that everyone wants a white-collar job. And that is the orientation we are trying to change in people. People need to change their orientation”.