Full Project – The Repositioned Bank of Industry (BOI) and Industrial Development in Nigeria
1.1 BACKGROUND OF THE STUDY
A new dawn is emerging for the bank of industry with the recent directive by President Goodluck Jonathan that it should be recapitalized through foreign institutional investors. This policy if successfully implemented following due process and current best practices will improve the capacity of Nigeria Long term development Finance Institution to lend to the Industrial sector.
One of the major issues confronting the present administration is the state of the Nigerian economy Nigeria economy is depressed, characterized by very low level of business activities, low income, low profit level and low investments. One sure way of salvaging failing industrial sector is the repositioning/reconsolidation of the bank of industry.
The Bank of Industry is Nigeria’s oldest largest and most successful development financing institutions assistance for the establishment of large, medium and small projects as well as providing the enabling environment for the expansion, diversification and modernization of existing industries and rehabilitation of ailing ones.
The Bank of Industry (BOI) was created in 2001 out of the Nigerian Industrial Development Bank (NIDB) Ltd which was incorporated in 1964 which took off with an authorized share capital of £2 million. In the wake of (NIDB’s) transformation into Bank of Industry (BOI) in 2001, its initial authorized capital was set at N50 billion. It was increased to N250 billion in order to position the bank to adequately fund the nations industries.
The federal government has only so far injected N36 billion since 2007 resulting in a short fall in capital base, has limited the growth in the industrial sector of the economy. President Jonathan having observed the diving trend in the manufacturing sector (low contribution in GDP) said the more to recapitalize the bank of industry was not to only improve it’s capacity to fund the country’s industrial sector but to also align its operations with international best practices.
The Bank of Industry (BOI) and the Nigerian financial system are charged to lead the on-going recapitalization of the country not only for economic development, but also in the light of the fact that globalization has placed a great premium on manufacturing so as to respond to some of the major global strands, shaping the global competitive contest and therefore the possibility for manufacturing.
1.2 STATEMENT OF PROBLEM
- Inadequate capital base to fund industrial development in Nigeria.
- Lack of transparency in projects appraisal and funds disbursement.
- Lack of capacity by the industrial sector to utilize available funds.
- Funds disbursed for specific manufacturing sectors being channeled to other things (e.g. to non recoupable projects).
- Lack of international best practices in industrial fund management and administration.
- Political and ethnic considerations in loan approvals and project locations.
- The impact of repositioning/recapitalization of Bank of Industry towards industrial development in Nigeria will be critically discussed.
It can be observed that one of the critical sectors required to turn around the diving fortunes of the economy is the manufacturing sector as the industries have the capacity to create jobs.
1.3 OBJECTIVES OF THE STUDY
Every research work is geared towards finding a solution to already existing problem or establishing effective relationship between variables. Every problem identified has a proposed solution. Therefore, the following solutions shall serve as the objective of this study:
- To identify other sources of increasing the capital base of Bank of Industry (BOI) other than federal government grant/injection of capital.
- To identify economic sectors that have been ideal where funds from Bank of Industry (BOI) can be channeled and it will yield returns and contribute to GDP.
- To develop a work plan or project monitoring and evaluate policy on funds released or loaned out.
- To ensure that funds loaned out for specific project/investments are used for that purpose.
1.4 RESEARCH QUESTION
The research questions below shall serve as a guide in the quest for the answers to the problem under study:
- Who funds the Bank of Industry and how much capital is needed to fund the bank?
- Is Bank of Industry (BOI) under any regulatory authority like the Central Bank of Nigeria (CBN)?
- What sectors of the economy need Bank of Industry (BOI) assistance most?
- On what conditions does bank of Industry gives out loan?
1.5 SIGNFICIANCE OF THE STUDY
The Bank of Industry has a predominant position in the industrial development of under developed and low developed countries. Nigeria has a population of over 167 million people whose demands are chattered for by international communities making the country a dumping ground. This project study shall assess the role of Bank of Industry (BOI) in Nigeria-in jump starting and evaluating the growth and development of the industrial sector in Nigeria.
In addition it will look at why the Nigerian Bank of Industry (BOI) has not attained its mandate since 2001, 10 years after it’s birth. Equally, it shall strive to enhance the knowledge of its would be readers on Nigerian Bank of Industry.
- SCOPE OF THE STUDY
This study is limited to the Bank of Industry (BOI) and set to know how to repositioned the bank for industrial development in Nigeria.
1.7 LIMITATIONS OF THE STUDY
The researcher was faced with some obstacles. In the course of carrying out this study as result of some factors such as financial and materials constraints which is beyond the researchers control.
- Time Constraints: The time available for this research to be carried out is limited since other activities are bound to infringe and interfere with the time allocated to the project. This time has constantly been depleted by the incessant changes in the school calendar. Also being a student research, the research is often expected to complete the work within a specific time for it to be successful.
- Lack of Funds: The research is constrained financially because of the high cost of material. The high cost of transportation occasioned by increased in fuel has not help matters in any way since one has to travel to places to collect materials for the research. The result is that research fund may be insufficient in inadequate for one to carry out research as would wish to.
- Infrastructural Inadequacies: There is a general condition of inadequacy of infrastructure such as textbooks, libraries, telecommunication equipment, computers network and social amenities that makes life comfortable for the researcher. The lack of appropriate textbooks in most libraries is a serious impediment to a research of this nature. Majority of the libraries is not well stocked with the pre-requisite textbooks.
1.8 THE STATISTICAL TOOLS TO BE USED
In a bid to obtain the primary data to be used in analyzing the research question and hypothesis, questionnaires shall be randomly administered to the chosen population. Secondary data will also be used in the course of this study.
The data analysis technique shall be chi-square. It will measure the discrepancies existing between observed and expected frequencies.
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Full Project – The Repositioned Bank of Industry (BOI) and Industrial Development in Nigeria