The Nigerian government has approved a plan to recapitalize the Bank of Industry, a development-centered finance institution, tripling its total capital from about $1.57 billion up to $4.72 billion.
There is no set timeline for these funds to be released. For some, they can’t come soon enough; the Bank of Industry, or BOI, has been underfunded for years. That’s despite Nigeria’s impressive GDP of about $250 billion, which makes it the African continent’s second-largest economy after South Africa. (Nigeria’s GDP could be rebased as early as next year, and the pursuant recalculation could bring the actual figure up to $350 billion.)
The BOI operates under mixed ownership; the majority of its assets -- nearly 60 percent -- belong to the federal government’s Ministry of Finance. Another 40 percent belongs to the Central Bank of Nigeria, with private shareholders claiming less than 1 percent total ownership.
BOI General Manager Joseph Babatunde said Friday that he welcomed the pending recapitalization, according to the Premium Times, a newspaper based in the capital city of Abuja.
“[Under-capitalization] hindered the bank developmental impact and attraction of needed long-term funds from international and multilateral agencies,” Babatunde said. “Government, in the last couple of years, has been very proactive in the area of addressing the dearth of long term investable funds required by the manufacturing sector.”
Manufacturing is only one of the BOI’s myriad sectors of activity. The organization aims to spur development by steering capital toward projects and businesses in diverse sectors including agriculture, textile, aviation, technology and media. The BOI often teams up with state governments to deliver funds where they are needed most, and has already disbursed about $1.5 billion to business owners across the country.
Despite Nigeria’s oil wealth, the country suffers from a massive wealth gap that has more than half the population living below the poverty line. Graft and mismanagement are largely to blame; a full 94 percent of citizens say corruption is widespread, according to a Gallup poll conducted last year.
The BOI is considered a tool for progress, but it too has been affected by corruption. This year, allegations surfaced that the notorious business mogul Jimoh Ibrahim routed a BOI loan of more than $200 million into his own privately owned company, subverting the bank’s efforts to inject capital into the country’s struggling aviation industry.
BOI officials hope to use the organization to spur growth in sectors that have historically been neglected. Manufacturing and agriculture are two areas of high priority, since the majority of Nigeria’s citizens work in agriculture while manufacturing -- a small but growing sector -- could be the key to economic repositioning in an increasingly globalized world.