Nigeria’s oil and gas sector received a boost on Wednesday as the Nigerian Content Development and Monitoring Board (NCDMB) and Bank of Industry launched a new $50 million fund for NOGAPS Manufacturing Product Line.
The fund aims to incentivize companies to manufacture equipment components used in the oil and gas industry and linkage sectors within the Nigerian Oil and Gas Parks.
Speaking at the signing ceremony in Lagos, the Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, explained that the fund would only be accessible to companies that operate within the oil and gas parks developed by the Board in Bayelsa and Cross River State.
Wabote added that the NOGAPs Manufacturing Fund is separate from the initial $300m fund being managed by BOI with five product lines, which aims to support Nigerian businesses that contribute one per cent to the Nigerian Content Development Fund.
The new NOGAPS fund would have a unique allocation and special eligibility criteria and collateral structure. It is designed to support Nigerian companies that will operate within the designated NOGAPS Industrial Park for the purpose of financing manufacturing activities, purchasing fixed assets, working capitals, and logistic.
Beneficiaries can receive a maximum single obligor of $3m and a minimum of a single obligor of $250,000.00, with one year moratorium repayable within five years at five percent interest per annum.
Wabote also highlighted that the decision to establish the NOGAPS Manufacturing Fund was informed by the peculiarities of the manufacturing sector, including 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.
Unlike the Nigerian Content Intervention Funds which require 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.
The Managing Director, Bank of Industry, Mr. Olukayode Pitan, applauded the Board for being a partner in progress and noted that the fund would further help promote in-country manufacturing and job creation. Pitan added that the interest rates are very good, just like the initial fund, which is less than ten percent, and the same thing will apply to this one. All they are looking for are Nigerians who want to manufacture in Nigeria.
The NOGAPS park also offers incentives such as reduced accommodation rates, guaranteed power supply, and rent that only begins to count when the company commences manufacturing.
The NCDMB established the NCI Fund in 2018 to finance 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 – Manufacturing Finance, Asset Acquisition Finance, Contract Finance, Loan Refinance, and Community Contractor Finance.
The Board also has a $30 million Working Capital Fund for oil and gas service companies and a $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 sidelines of the event, the two chief executives signed a supplementary memorandum of understanding for the $300m Nigerian Content Intervention Fund for an extension of the agreement.
