Nigerian Content: Banks List Conditions for Funding


By , 07.13.2010 


Executives of Nigerian banks have given conditions that must be fulfilled for them to support and fund the Nigerian Content scheme put in place by the Federal Government to build local capacity and capability in Nigeria’s oil and gas sector.


Speaking on behalf of the bankers during their meeting with the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Ernest Nwapa, in Lagos at the weekend, Group Managing Director-Designate of United Bank for Africa (UBA) Plc, Mr. Philip Oduoza, stated the conditions would ensure financial discipline by the beneficiaries of the fund.He said the banks would be able to give out some medium and long-term loans if the conditions were favourable.


Oduoza noted that since the banks are managing the risks, both the International Oil Companies (IOCs) and the NCDMB must collaborate with the banks to ensure that the money they lend out to indigenous oil and gas operators are eventually paid back.“One of the conditions is the fact that the board needs to assist us in terms of screening who should benefit from this, because the moment this is put together, every person will jump into it and feel that it is something they can do. So, to that extent, we will like to have a preliminary screening to be done in terms of who is capable and who will be able to handle the projects.


“The second one is in terms of capacity building- in terms of training. So, I believe that the board should also assist in building the local capacity- in equipping people with the right knowledge and so on. Also, the IOCs, I think, they have a role to play here because in supporting this particular project; they should be able to equip the local contractors with the necessary technical competence and knowledge, similar to what they do,” he said.


Oduoza also insisted that as a third condition, the beneficiaries must imbibe the normal behaviour expected from borrowers, which is financial discipline. According to him, once a job is given to the local operators, they should be able to execute them and also repair the loans.A fourth condition, he said, is that the IOCs must go beyond helping to develop local capacity and also ensure that they put domiciliation in place.


“The IOCs will tell us that they give domiciliation and when you pay, we are all human beings – at the end of the day, when we deliver the loan and the job is executed, you will see some diversion risks that you have to deal with, which is a problem. So, I think what the IOCs need to do is to go beyond helping to develop local capacity and ensure that domiciliation is put in place and we will all work together towards that,” he said.


As a final condition, Oduoza said the banks would assist the beneficiaries in putting up proper books of accounts, adding that most of the operators do not keep proper books of accounting. The CEO-designate of UBA Plc commended the Federal Government for the programme, saying that it would benefit the IOCs, the indigenous operators, financial institutions and the economy.


“And for the economy in general, I believe this is a very laudable project, which I believe the banks are going to support. Again, it is coming at appropriate time because, in terms of financing, you find out that all the banks are virtually awash with liquidity and they are looking for outlets for lending. In fact, this is going to provide a very broader outlet for lending, as far as the banks are concerned, and at very reasonable costs, in terms of interest rates and all other fees,” he said.






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