Leather Industry Gets boost as BoI Embraces Made in Aba

Nigeri’s leading development finance institution, the Bank of Industry, is on the threshold of becoming a veritable game changer and growth catalyst for micro, small and medium enterprises, MSME, across the country.

Last week in Aba, BoI unveiled its new innovative product, Cluster Financing of small and medium industries in the manufacturing sector. Specifically, the bank is propping no fewer than 70,000 artisans engaged in the leather products business. Each beneficiary, all members of the Leather Products Manufacturers Association of Abia State, LEPMAAS, have started receiving short term loans, between N300,000 and N500,000.

The disbursement of loans to the first batch of beneficiaries was witnessed by Abia State Governor, Dr. Okezie Ikpeazu; the Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Mr. Edet Sunday Akpan, members of the organized private sector, sundry cooperative and business groups in Abia State.

BoI drives the Aba Finished Leather Goods Cluster Financing scheme but Fidelity Bank will handle the disbursement of about N400m every quarter to 300 new target beneficiaries, all members of the cluster. The package was designed to provide a tailored bundle of financial and non-financial services including capacity building to qualified members of LEPMAAS. Beneficiaries will maintain SME accounts with the commercial bank and will enjoy zero-cost in opening current accounts.

Indeed, this latest intervention is targeting some 150,000 artisans at Aba shoe and leather goods cluster who produce shoes, trunk box, belt and bags for markets in Nigeria and its neighboring countries including Cameroun, Togo, Ghana, Senegal, Ivory Coast, Gambia and Mali. Members of LEPMASS, the umbrella association of the Aba Cluster, are in four distinct clusters with 284 production lines. The group is structured into 14 administrative zones.

Analysts have hailed this collaboration between the two banks as a win-win situation for its flexible terms, the propensity to accelerate import substitution in the leather products industry, create more jobs and earn the nation huge foreign exchange. Such optimism is not misplaced going by the enthusiasm exuded by the Managing Director of BoI, Mr. Olukayode Pitan. “Taking a cursory look at the Aba cluster and the contributions of the members of LEPMAAS to the leather sector, informal computations put revenue from the cluster at over N10 billion annually despite the competing volumes of similar goods being imported into the country”, he observed.

The Federal Government is not oblivious of this opportunity. It is writing a national Leather and Leather Products Policy after acquiring machineries and equipment to modernize the leather craft industry in Aba, the Minister of Industry, Trade and Investment disclosed in his message.

The Aba Cluster scheme, owing to its tailored framework, may be the magic tonic to bring out the best from the famed industrial ingenuity of Abians. The loan from BoI is at very low interest and is without any collateral; available for procurement of materials to expand and improve existing production lines. Pitan spoke on the promising outcomes. “It was this significant opportunity to substitute import volumes by supporting quality improvement of Made in Aba products, create additional jobs and improve the quality of lives of the artisans that led the Bank of Industry to design this tailored programme.

“By providing low interest, non-collateralized loans, BoI has offered flexibility for qualified members of LEPMAAS recommended by their line and zonal chairmen to access up to N300, 000 towards the procurement of materials to expand and improve their production activities. These members are also covered by a guarantee provided by the LEPMAAS executives who are working closely with the Bank to ensure prompt repayment of these loans by the beneficiaries,” he elaborated.

For the industrious Aba craftsmen, this is also an opportunity to learn best practice methods. The BoI is offering “a bouquet of financial and non-financial services.” The Ford Foundation and Fidelity Bank are providing invaluable support service described by Pitan as “well-rounded product that speaks to the financial and capacity development needs of the members and executives of LEPMAAS.”

Specifically, the Ford Foundation, already pursuing an advocacy agenda in the Aba cluster region, will be providing a grant that focuses on strengthening the capacities of the leaders and beneficiaries in the cluster even as it erects monitoring structures to ensure loan repayments. Fidelity Bank will provide account management services to the loan beneficiaries. A fully furnished secretariat to support the governance activities of the LEPMAAS executives was commissioned shortly after cheques were distributed to loan beneficiaries who successful passed the litmus test of BOI’s evaluation process.