BANK OF INDUSTRY: OVERVIEW AND FUNCTIONS
You’ve probably heard of the Bank of Industry at some point in time. But what exactly is the Bank of Industry, and what does it entail? In this post, we shall discuss the Bank of industry, what it is about, and what its functions are.
What is the Bank of Industry?
The Bank of Industry is a commercial or development bank that is created in a bid to establish financial assistance to businesses in the manufacturing and processing industry/sector. Because these industries are mainly industrial, the Bank of Industry is charged with providing finances to purchase equipment for value chain productions. The Bank of Industry Limited (BOI) is Nigeria’s oldest, largest and most successful development financing institution. It was established out of a merger between the Nigerian Industrial Development Bank Nigerian Bank for Commerce and Industry (NBCI) and the National Economic Reconstruction Fund (NERFUND) in 2001.
What does the Bank of Industry do?
The primary aim of the Bank of Industry in Nigeria is making financial assistance to the industrial sector available. There are other functions of the Bank of Industry, and they are;
- Finances the purchase of Plant and Equipment: The Bank of Industry’s chief aim is to promote and assist the industrial sector of the economy in the country. The industrial sector is capital intensive and involves machinery, and so the Bank of Industry only finances the purchases of plant and equipment related to the business in question. The Bank of Industry does not finance raw materials or land and buildings.
- Disburses Funds to The Suppliers of Equipment: The Bank of Industry is tasked with the disbursement of funds to suppliers of equipment and making sure that the machines are well received. It also ensures that the cost quoted for the equipment is worth the value stated.
- Helps Businesses Source for Working Capital Requirements: while the Bank of Industry cannot finance working capital for businesses, it can, however, help to source for means to get these funds. The Bank of industry enters negotiation terms with the financial institutions, assisting in the application process for the loans.
- Provides Business Support: besides the provision of funds to businesses, the Nigeria Bank of Industry also gives support to these businesses. The BOI is also tasked with ensuring that businesses succeed and grow. One way it does this is by ensuring that businesses applying for loans get these loans where and when they need them.
Bank of Industry Operations
As stated earlier, the Bank of Industry is centred on providing support for businesses, especially in the industrial sector. However, its operations are widespread. The Bank of Industry is also tasked with the management and disbursal of the Government Enterprise and Empowerment Program (GEEP).
This is a social intervention scheme set up by the Nigerian federal government to support small and medium-scale local businesses with interest-free loans to grow their businesses. The government enterprise and empowerment program has spawned schemes like the Trader Moni and Market Moni initiatives. The Bank of industry administers these schemes.
The Bank of Industry, alongside commercial banks in Nigeria, helps businesses grow and develop. If your business is one of such, then the Bank of Industry is your best bet for help and support if you seek to expand.