By| Goodluck E.Adubazi, Abuja
The Nigerian Content Development and Monitoring Board (NCDMB) and the Bank of Industry (BOI) have launched a $100 million Nigerian Content Equity Fund (NCEF) to provide long-term equity financing to indigenous oil and gas companies and accelerate local content development.
The Investment Committee of the Fund was inaugurated in Lagos on Friday by the Executive Secretary of NCDMB, Engr. Felix Omatsola Ogbe, marking a major step towards the implementation of the new financing window under the Nigerian Content Intervention Fund (NCI Fund).
Under the scheme, the $100 million Fund has an obligor limit of $5 million, with NCDMB providing the capital while BOI serves as the Fund Manager.
The initiative is targeted at oilfield service companies, manufacturers linked to the oil and gas industry, fabrication yards and other connected businesses, with the objective of promoting economic growth, job creation and wealth creation.
According to the Fund’s product paper, the NCEF is designed to reduce the cost of locally provided oil and gas products and services, create an additional income stream for NCDMB and attract other investors and lenders to financially viable Nigerian companies.
The Fund is also projected to generate approximately 12,500 direct jobs and 7,000 indirect jobs through its impact on oil and gas projects.
Speaking at the inauguration, Ogbe charged members of the Investment Committee to subject all prospective beneficiaries to rigorous due diligence and ensure that the Fund achieves its intended objectives.
He stressed that the Equity Fund is not a grant, insisting that beneficiaries must deploy the funds judiciously and meet the terms of the investment.
“Our top priority should be identifying people who will use the Fund properly and, most importantly, return our funds back to us so that we can continue the programme for other deserving beneficiaries,” Ogbe said.
The NCEF represents a new financing model within the NCI Fund, which was established under Section 104 of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to address financing challenges confronting indigenous oil and gas companies.
Over the past decade, five NCI Fund products managed by BOI and two managed by the Nigerian Export-Import Bank (NEXIM) have provided debt financing to qualified companies, with facilities typically running for five years at an interest rate of eight per cent.
The new Equity Fund, however, provides an alternative by taking an equity position rather than relying solely on conventional debt financing.
The Managing Director of BOI, Dr. Olasupo Olusi, described the inauguration as a major milestone in the partnership between the two institutions, noting that their collaboration dates back nearly a decade.
According to him, the partnership commenced with the administration of the $350 million Nigerian Content Intervention Fund, which enabled hundreds of indigenous oil and gas companies to access financing for business expansion.
Olusi said the introduction of equity financing would address a critical gap in the industry’s financing architecture, particularly for businesses that have viable operations but do not possess sufficient collateral to secure conventional loans.
“The next step, which I am very impressed with and very thankful to the NCDMB for thinking through with BOI, is the need to fill the finance gap with equity,” he said.
He expressed confidence that the initiative would attract additional investments into Nigeria’s oil and gas industry while strengthening indigenous participation.
Also speaking, BOI’s Group Head, Equity Investments, Mr. Chike Chukwuelu, said the Fund would address what he described as the industry’s “missing middle”—businesses with strong growth potential that struggle to access senior debt because they cannot meet commercial lenders’ collateral requirements.
He explained that the equity structure would allow the Fund Manager to maintain closer oversight of beneficiary companies while supporting them to strengthen governance, improve operations and become sustainable businesses.
Meanwhile, the Senior Technical Adviser to the NCDMB Executive Secretary, Engr. Austin Uzoka, described the Equity Fund as an opportunity to achieve objectives that previous financing interventions could not fully accomplish.
He said the Investment Committee would provide strategic oversight, ensure prudent investment decisions and develop a portfolio of companies capable of growing into major players in the Nigerian oil and gas industry.
