It was founded to help businesses grow. But many of them took loans from the Bank of Industry (BoI) without paying back. This has led to an investigation by the House of Representatives Public Account Committee, write Bukola Aroloye and Dele Anofi.

The Managing Director of Bank of Industry (BoI), Mr. Olukayode Pitan, is by nature a quiet and self-effacing man. But this seems to have changed. Owing to the quantum of investment portfolio and money his organisation, sits on, Pitan, in just about three months after assuming office has found out how hot his seat can be.

Last month he was a guest at the House of Representatives Public Account Committee hearing of the N11 billion unrecovered loans allegations against the BoI. The Committee is headed by Kingsley Chida. In inviting the BoI chief, the committee noted that the inability to recover such humongous loan is capable of defeating the objectives of boosting the economy through the active participation of small and medium enterprises (SMEs).The queries at the hearing came in torrents. From the 2015 Auditor General’s queries on the recovery of N8billion to the N2.7 billion domiciled with BoI for disbursement since 2012 under the YouWin initiative. These monies, the PAC believes, are capable of sending the government’s financial institution into distress.

Pitan, however, spiritedly defended the bank, explaining steps that have been taken to recover the loans. For instance, on the recovery of an N8 billion credit facility, he explained that the BoI, in complying with the directives of the Accountant General of the Federation (AGF), commenced recovery efforts immediately; including publishing the names of the debtor companies in three newspapers.

“In addition, we embarked on the second option and we have recovered some money, some of the companies were reported to the Economic and Financial Crimes Commission (EFCC) for recovery. We have also taken possession of the property of some of them and they are on the verge of being sold,” the BoI boss explained, adding that some of the debtors have taken financial institution to court, including some firms he perceives as having no case but who opted to subject the recovery to litigation.

Still, the N2.7billion YouWin fund domiciled with BoI for disbursement was another issue he had to defend. Pitan’s revelation on this, however, raised some curiosity. Since 2012, the BoI boss said, the bank has only been able to access N870million out of the N2.7 billion. Of the accessed money, he further revealed that N129million was returned to the treasury through the Treasury Single Account (TSA) in 2015.

“We could only access N780million from the fund and we returned N129million to the treasury through the TSA with the interest of over N2billion. Ours was to disburse the funds to the beneficiaries in accordance with the list from the Ministry of Finance. The fund is not BoI’s,” he told the lawmakers.

The BoI helmsman was, however, silent on the exact figures recovered so far, as well as the names of the companies that had taken the bank to court as he explained that he has to check his records for the figure.

By and large, Pitan believes that the situation is not enough to put the bank in any precarious situation. “The bank is not under stress. This debt does not in any way threaten our business. We are rated and in a healthy position, this cannot affect us,” he assured the PAC members.

SMEs operators’ position

For operators in the SME sector, Pitan’s claim of disbursement of such money does not hold. The Chairman of Nigeria Association of Small Scale Industrialists, Lagos State Chapter, Kuti George, challenged the bank to make public the list of beneficiaries of such loans. He explained that as a body, his members do not really concern themselves with the credit facility, considering that it has a robust financing system within itself.

“I don’t know of any loan given out; we don’t really bother our self on this because we operate a very vibrant cooperative system that even gives money to our members without tears based on personal guarantee of people and we even give loans among ourselves,” George explained.

The Chairman of Toiletries and Cosmetics Manufacturers’ group of the Manufacturers Association of Nigeria (MAN), Mr. Ikpong Umoh, corroborated George’s view on the matter. He disclosed that the BoI does not meet the needs of SMEs, as it gives loans with high interest rate of 25 percent or more to SMEs.

“BoI claims to directly help SMEs but the fact is that BoI does not share and under-write the risk of SMEs. For example, BoI gives loan for machineries and expansion and not for start-ups of new industries,” he explained.

George explained that if government truly wants to grow the industrial base, then it should not be scared of risk taking. “We should be prepared to take risk instead of giving loans to people who are ready to payback. Instead, he said, such loans end up in the pocket of people who will not come back.

Beneficiaries of BOI loans

However, some stakeholders disagree with the submissions of some SMEs operators. One of such is the national programme coordinator of Rural Finance Institution (RUFIN), Olumuyiwa Azeez. For him, the activities of the BoI’s partnership with RUFIN is geared towards stimulating a seamless process by reaching beneficiaries in rural areas across the federation and including them in Nigeria’s financial landscape. This is aptly supported by the BoI.

Azeez said the institution is proud that its track record has earned it an opportunity to be a channel for reaching out to thousands of micro entrepreneurs who do not have an opportunity of accessing funds to boost their businesses.

Yet, others say that the impact of the BoI reverberates across the business landscape of the country. For instance, the BoI, through its Graduate Entrepreneurship Fund (GEF) programme targeted at members of the National Youth Service Corp (NYSC), has recorded over N262.9 million disbursements to 177 successful candidates. The loans granted under this scheme have since become interest-free from last May. However, beneficiaries of loans preceding May 2017, will be required to pay loan interests that accrued up to 30th April, 2017. As at March 31, 2017, BoI had approved N583.8 million for disbursements to entrepreneurs under the scheme.

And the BoI is delighted in this. “The Bank of Industry is highly delighted in the outcome of its investment in these young Nigerians. The bank firmly believes that entrepreneurship is a critical pathway to resolving the worrisome unemployment problem in the country. Hence, the bank desires to ensure the businesses that have been created through the GEF programme remain sustainable with progressive migration from small businesses to medium and eventually to large enterprises,” a statement by the bank read.

Still, the BoI recently unveiled an interest-free loan for women artisans, market women and small holder farmers in the country. The scheme comes under the National Women Empowerment Fund (NAWEF) of the federal government. NAWEF is an aspect of the federal government’s Social Investment (Intervention) programme designed for women and administered by BoI to issue interest-free loans to successful applicants.

The minister for women affairs and social development, Aisha Jummai Alhassan, listed eight states of Akwa Ibom, Adamawa, Borno, Yobe, Osun, Abia, Nasarawa and Jigawa have been selected for the pilot phase where women can access N200 million in loans, starting from N10,000 to N100,000.

BoI’s Senior Manager, Micro enterprises, Aisha Abdullahi, explained that her organisation also has a scheme, the Government Enterprise and Empowerment Programme (GEEP), which is exactly like NAWEF, adding that the latter is only for women, unlike GEEP where both men and women can benefit from it.

“The reason for this difference is to ensure that more women have access to interventions in order not to be crowded out by men. GEEP has already started and the verification process is like that of NAWEF,” she added.