The Nigerian Content Development and Monitoring Board (NCDMB) and Bank of Industry on Wednesday in Lagos launched a $US50 million dollars fund for NOGAPS Manufacturing Product Line.
The fund is to incentivize companies that would operate in the Nigerian Oil and Gas Parks (NOGAPS) and engage in the manufacturing of equipment components used in the oil and gas industry and linkage sectors.
Speaking at the signing ceremony, the Executive Secretary of NCDMB, Engr Simbi Kesiye Wabote stated that the fund would support oil and gas companies that would operate in the oil and gas parks developed by the Board in Bayelsa and Cross River States.
He reiterated that the fund will only be accessed by companies that take up spaces in the park to procure equipment or build their manufacturing shopfloor within the park.
Wabote explained that the NOGAPs Manufacturing Fund is different from the initial $300 million fund being managed by BOI with five product lines that aim at supporting Nigerian businesses that contribute their one per cent to the Nigerian Content Development Fund.
The new fund would be a stand-alone product line with distinct fund allocation and special eligibility criteria and collateral structure.
According to Wabote, the “decision of the Board to establish the product was informed by the peculiarities of the manufacturing sector, which include infrastructure challenges, long gestation, long lead time before returns, low margins on products, and high risk attached to the endeavor, in addition to the reluctance of commercial banks to lend to the sector and application of stiff collateral and eligibility criteria where loans are extended.”
On the criteria for accessing the NOGAPS manufacturing funds, the Executive Secretary hinted that, unlike the Nigerian Content Intervention Funds which requires companies to be contributors before they can benefit, the NOGAPS fund can be accessed by companies that will be domiciled and will manufacture their products within the parks.
He said: “The Fund will provide loans to Nigerian companies that meet the criteria to operate in any of the designated NOGAPS Industrial Park for the purpose of financing manufacturing activities, purchase of fixed assets, working capital, and logistics. Beneficiaries will get a maximum single obligor of $3 million and minimum of a single obligor of $250,000 with one year moratorium repayable within five years at five per cent interest per annum.”
On the incentives available in the NOGAPS park, Wabote disclosed that the rate for accommodation is reduced, power is guaranteed, and the rent will only begin to count when the company begins manufacturing.
In his remarks, the Managing Director, Bank of Industry, Mr Olukayode Pitan, applauded the Board for being a partner in progress. He noted that the fund will further help promote in-country manufacturing as well as the creation of employment.
Pitan pointed out that the interest rate will help companies easily access the product and pay it back. “The interest rates are very good just like the initial fund which is less than 10 percent and the same thing will apply to this one. All we are looking for are Nigerians who want to manufacture in Nigeria.”
He charged Nigerian companies to harness the opportunity to pick up space within the park to produce locally.
The Board established the NCI Fund in 2018 with the purpose of financing Oil and Gas companies to increase capacity and grow Nigerian Content in the Industry. Presently, the NCI Fund has five product lines which are being managed by the Bank of Industry. They include – Manufacturing Finance -$10 million; Asset Acquisition Finance -$10 million; Contract Finance -$5 million; Loan Refinance -$10 million and Community Contractor Finance – N20 million.
The Board also has a US$30 million Working Capital Fund for oil and gas service companies and a US$20 million Fund for Women in Oil and Gas Intervention Fund. The last two facilities are administered by the Nexim Nigerian Export-Import Bank and the agreements were signed in mid-2021.
On the sideline of the event, the two chief Executives signed a supplementary memorandum of understanding for the $300m Nigerian Content Intervention Fund for extension of the agreement.