…NCDF acts as a catalyst for industrialization of the Nigerian oil and gas sector to support targeted interventions.
…Harps on compliance and loan repayments for others to benefit from scheme.
-Felix Douglas
In the two-day sensitization programme organized by Nigerian Content Developing and Monitoring Board (NCDMB) in Lagos, it explained to stakeholders and business entities on issues bothering on compliance, certificate and payment portal and revised community contractors finance system.
Manager of Nigeria Content Development Fund (NCDF) of NCDMB, Turner Erefa representing Fateemah Mohammed, General Manager NCDF and Treasury, disclosed to participants that the awareness is to emphasise about the fund including other gray areas.
Erefa sated clearly that the Board derives most of its funding from 1% remitted to it by companies in the upstream sector.
The fund rests in Bank of Industry (BoI) and the Board partnered with BoI and NEXIM Bank as its development banks.
The fund is designed to meet the needs of indigenous service providers and other key players in the Nigerian oil and gas industry.
NCDF will provide funding for various initiatives. The fund will act as a catalyst for industrialization of the Nigerian oil and gas sector used to support targeted interventions to build indigenous capabilities with the aim to maximize utilization of Nigerian resources including materials services and assets. The facilities of the bank are for asset acquisition, manufacturing and loan refinancing.
Erefa noted that loan refinancing is important and the rate of BoI is low. The bank helps to refinance existing loans, contract and community financing.
NEXIM bank has funds for women in oil and gas. This intervention was designed for female MDs and members of Boards of Directors with working capital, loan asset finance and lease finance facility.
The fund has grown in size with an initial $200 million from BoI presently, it is $350 million. The Board has $30 million with NEXIM Bank for working capital and capacity building with another $20 million approved for women in oil and gas.
The fund size has been increasing because beneficiaries have repaid their loans.
Erefa advised people to apply for the fund, hence “it will make sense that you put your entity or your organization in line to benefit from single digit interest, 149 entities have been approved and about 78 have been disbursed.”
He said about 16 entities have benefited from women in oil and gas fund and urged people to take the advantage.
Erefa observed that the working capital scheme in NEXIM Bank is effective. It’s a product people are benefitting from and prospective business owner can apply.
Although the process had been a windfall for beneficiaries not without challenges, BoI noticed issue with bank guarantees taking time to solve with commercial banks.
Erefa explained that as at inception, exchange rate was low at $10 million and about 1.5 million, but presently is 15 billion. The banks are affected in terms of capitalization.
Therefore NCDMB is open for suggestions to improve the process. The Board has also noticed low awareness of the fund and the fact that it can be assessed by companies.
Poor awareness is one of the challenges confronting the fund resulting in low application rates and missed opportunities for many entities.
On the BoI, there are challenges in meeting eligibility criteria from the bank in terms of guarantee.
Erefa told participants to have good relationship with their banks before applying to BoI because one of the other challenges is incomplete documentation. Some entities are slow with documentation.
Other challenges include repayment issues bordering around economic uncertainty, cash flow constraints and borrowers lacking financial management capacity.
Major challenges that have been facing the fund with default and delinquency have negative consequences for both borrowers and the fund.
NCDMB is sensitizing the public; it has also planned solution awareness campaigns to target MSMEs and continues to encourage women who may be facing barriers in assessing traditional funding sources especially those in oil and gas initiative.
According to Erefa, the Board will continue to target community contractors. It is also working on the back to Creek Initiative, which it is working on to develop locals.
“We will also follow our sensitization through NCI for application processes and also share existing stories of beneficiaries to inspire and motivate potential applicants.”
“We are looking to simplify the access requirements in collaboration with our partners, and continue to fine tune the collateral requirements with them to see how they can access the phone. Rest assured, the Board will continue to offer finance adoptions to make the fund more accessible to a wider range of applicants.”
NCDMB remains dynamic to continue to implement systematic feedback and gather stakeholders, monitor key metrics to assess the process and continuously refine it for optimal efficiency.
The application process will be simplified to further enhance communication channels and increase financial inclusion to monitor and evaluate progress.
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