Business Hilights
Tracking Nigeria's Headline Business News Online

BoI crashes interest rate of youths’ loans to zero percent to grow SMEs

Though the Minister of Finance has failed to streamline the role borders between all development banks following the recent takeoff of Development Bank of Nigeria (DBN), there are signals that Bank of Industry (BoI) is now raising its game in supporting any manner of SMEs activities either to avoid being seen as not doing well or merger with other banks or even scraping.

Only weekend, the bank announced that since the beginning of this month, it has started encouraging young entrepreneurs by administering their loans at zero per cent interest charge.

According to the bank, “For youths under the Bank of Industry’s Graduate Entrepreneurship Fund (GEF) programme, access to loans will henceforth be at zero per cent interest charge from the initial nine per cent, thus requiring only the repayment of the principal amounts in a bid to enhance business creation and sustainability”.

“The GEF scheme being implemented by the Bank in partnership with the National Youth Service Corps (NYSC) Directorate currently on the second edition, has recorded over N262.9 million disbursements to 177 successful candidates.

“To boost the multiplier effect of the scheme, the bank has decided to further encourage such young entrepreneurs by administering their loans at zero per cent interest charge effective 1st May, 2017.

|BoI further added that “By the action, existing GEF loans and those to be disbursed from 1st of May 2017, will require repayment of only the principal amounts, while the 177 candidates that have been financed under the scheme will be required to pay loan interest that accrued up to 30th April, 2017”.

Business Hilights observed that as at March 31, 2017, the bank had approved N583.8 million for disbursements for entrepreneurs under the scheme. The bank explained that it was motivated by the larger part of the 177 candidates who have exhibited strong dedication to their businesses and have demonstrated unusual commitment to repayment of their loans including the 9% interest portion.

BoI further claimed that the first disbursements had already started creating impact in the agriculture value chain and creative industry, which encouraged it to plan addition of N46.98 million to be disbursed to the remaining 28 successful candidates who are in the various stages of complying with the loan requirements.

BoI said “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.

“It is believed that that this gesture will further attract young Nigerians that are undergoing their one-year compulsory National youth service to embrace entrepreneurship by participating in the GEF programme.

“It is pertinent to reiterate that the zero per cent interest charge on loans only applies only to the GEF programme which is implemented in partnership with NYSC Directorate”, the bank concluded.