There is a need to revitalise the Nigerian leather industry as the nation

looks inwards to generate additional revenue from the non-oil sector.

To increase the ability of local finished leather goods producers to

compete globally and with imported products. Imports from China currently
account for 90% of the Nigerian FLGs domestic market leaving Nigerian
producers with just a 10% share.

To target the consolidation and expansion of market share in

neighbouring West African countries which is under threat due to poor quality
products.
PURPOSE/
RATIONALE

To modernize the leather goods production process by providing local

producers with access to finance for purchase of modern equipment and
working capital.

Substantial increase in the industrys employment level.

To take advantage of the Markets for Development (MADE) project

being promoted by the DFID to assist Abas finished leather goods cluster with
access to appropriate technology as well as access to the international market,
increase their economic activity and trade, create jobs and raise incomes of the
artisans.
TARGET
MARKET/
CRITERIA
PROJECTED
IMPACT
PROGRAM
LIMIT
SINGLE
OBLIGOR
LIMIT

The fund will be accessed by limited liability companies and enterprises across
the country that use leather for the production of finished or semi-finished
shoe, bag and belt products for the local industry as well as for export to
foreign markets.
Small Scale
Medium Scale

Direct Employment
5-8
15-24

Indirect Employment
25-40
75-120

N1.0 Billion for the first phase of the program.

For the various components of the leather goods value chain, the following
loan limits are recommended:

SHOE UPPER PRODUCTION

Term Loan:
Working Capital:
Total:

N10.0 ~ N40.0 Million

N 2.5 ~ N10.0 Million
N12.50 ~ N50.0 Million

SHOE SOLE PRODUCTION

Term Loan:
Working Capital:
Total:

N10.0 ~ N40.0 Million

N 2.5 ~ N10.0 Million
N12.5 ~ N50.0 Million

FINISHED SHOE PRODUCTION

Term Loan:
Working Capital:
Total:

N10.0 ~ N40.0 Million

N 2.5 ~ N10.0 Million
N12.5 ~ N50.0 Million

BAG PRODUCTION
Term Loan:
Working Capital:
Total:

N10.0 ~ N40.0 Million

N2.5 ~ N10.0 Million
N12.5 ~ N50.0 Million

BELT PRODUCTION
Term Loan:
Working Capital:

N10.0 ~ N40.0 Million

N2.5 ~ N10.0 Million

Total: N12.5 ~ N50.0 Million

Term Loan
Interest Rate:
PRICING

9% per annum.

Fees:

1% Processing fee

TENOR

31/2 to 5 years inclusive of moratorium

MORATORIUM

6 12 months (from date of loan disbursement)

COLLATERAL/
SUPPORT

Loan Amount
Security Arrangement
(Nm)
1. Specific charge over the equipment financed.
2. Irrevocable Personal Guarantee of the Chief Promoter
of the company.
3. Two (2) external guarantors acceptable to BOI who
must belong to any of the following categories:
a)
5.0 10.0

Senior Civil Servant (Level 12 and above).

b) Bankers (not below the level of Assistant Manager) and

must have been confirmed by current employer.
c) Professionals i.e. Medical Doctors, Lawyers, Accountants,
Engineers, etc.
d) Senior Staff (not less than a manager) of reputable quoted
Companies, International Oil Companies,
Telecommunications Companies (GSM providers)
e) The guarantees must be supported with a Notarized
Statement of Net worth acceptable to BOI.

>10.0 20.0
1. All assets debenture.
2. Irrevocable Personal Guarantee of the Chief Promoter
of the company.
3. One (1) external guarantor acceptable to BOI who

must belong to any of the following categories:

f)
above).

Senior Civil Servant (Level 12 and

g) Bankers (not below the level of Assistant Manager) and

must have been confirmed by current employer.
h) Professionals i.e. Medical Doctors, Lawyers,
Accountants, Engineers, etc.
i)
Senior Staff (not less than a manager) of reputable
quoted Companies, International Oil Companies,
Telecommunications Companies (GSM providers)
The guarantees must be supported with a Notarized
Statement of Net worth acceptable to BOI.
Or
Bank Guarantee from Commercial Banks acceptable to BOI.

1. Legal mortgage on pledged property.

> 20.0

2. Irrevocable Personal Guarantee of the Chief Promoter

of the company.
Or
Bank Guarantee from Commercial Banks acceptable to BOI.

Loan -90% maximum for equipment and working capital.

Working Capital could also be provided by the SME-friendly banks and in that
case, BOIs loan shall be limited to equipment procurement).
FUNDING
STRUCTURE

Equity 10% (minimum) by the promoter(s)

For an existing project, the estimated value of the factory building

and/or relevant processing equipment, may be applied against the
borrowers 10% contribution. The factory building and/or equipment
must be valued professionally by any of BOIs accredited valuers.

DISBURSEMENT Term Loan:

In phases in accordance with agreed milestones and shall be backed by

provision of performance bond by the accredited equipment suppliers (where

the suppliers demand for advance payment before delivery of the equipment).
Working Capital:

REPAYMENT
SOURCE

REPAYMENT
MODE

After successful installation and testing of the equipment and payment

shall be made directly to raw materials suppliers.

From the cash flows generated by the operations of the project

Monthly by direct debit of customers account domiciled with the

participating SME-friendly bank on the basis of a Tripartite Agreement signed
between BOI, the SME-friendly Bank and the Customer. Such direct debit
collections must be remitted to BOI within 24 hours. In the event of default, the
SME-friendly bank must notify BOI within 24 hours to trigger prompt remedial
action by the Bank.

In the alternative, the borrower should also submit post-dated

cheques in line with the loan amortization schedule.