5 Nigerian Businesses That Could Benefit, What Could Hold Them Back

Experts say affordable development finance is critical as high commercial lending rates continue to constrain investment and business growth across Nigeria’s productive sectors.

The bigger test will be whether the funding translates into higher production, local value addition, exports, jobs and stronger Nigerian businesses.

The Bank of Industry is raising ₦250bn through its inaugural Series 1 Fixed Rate Bond, with the proceeds earmarked for eligible businesses and projects across agriculture and food processing, healthcare, engineering and technology, renewable energy, petrochemicals, oil and gas, creative industries and solid minerals.

The five-year bond, issued through BOI Financing SPV Plc under the bank’s $1bn multi-currency instruments programme, carries a yield of 17.35 percent to 17.50 percent. The offer opened on August 5 and is scheduled to close on August 11, with Chapel Hill Denham acting as lead issuing house and the bond to be listed on the FMDQ Securities Exchange.

BOI said the proceeds will provide medium- and long-term financing aimed at expanding productive capacity, creating and preserving jobs, increasing local value addition, supporting import substitution, boosting exports and strengthening domestic value chains.

However, access to capital alone will not resolve the structural problems facing Nigerian businesses. Here are five categories that could benefit and the constraints that could determine whether the financing produces measurable growth.

1. Manufacturers

Manufacturers could deploy longer-term capital towards machinery, factory expansion, production capacity, working capital and import substitution.

This matters because industrial investments often require several years to generate sufficient returns, making short-term and expensive commercial borrowing particularly difficult to sustain.

But the financing will have limited impact if factories continue to face unreliable electricity, high logistics costs, foreign-exchange pressures and expensive imported equipment.

The key question is therefore whether businesses use the capital to increase productive capacity rather than simply finance recurring expenses.

2. Agricultural and food processors

Agricultural processors could use the financing for processing equipment, storage, packaging, cold-chain facilities and other infrastructure needed to turn agricultural commodities into higher-value products.

Bank of Industry Managing Director and Chief Executive Officer, Dr Olasupo Olusi, has argued that Nigeria’s industrialisation opportunity lies in moving beyond the export of raw commodities towards domestic processing and higher-value manufacturing.

That makes processors particularly relevant to the BOI intervention, which specifically identifies agriculture and food processing among the eligible sectors.

But processors still face unreliable power, transportation costs, storage gaps and inconsistent supplies of raw materials.

Affordable financing can fund a processing plant; it cannot guarantee that the plant will operate at commercially viable capacity.

3. Renewable-energy businesses

Solar companies, mini-grid developers and other renewable-energy businesses could use long-term capital to finance equipment and expand energy projects.

The sector is particularly suited to development finance because projects can require substantial upfront investment before generating returns over several years.

BOI has identified renewable energy among the sectors eligible for financing under the bond.

The major constraints include the cost of imported equipment, foreign-exchange exposure, customers’ ability to pay and the long payback period associated with some energy projects.

The strongest beneficiaries are therefore likely to be businesses with commercially viable projects and established revenue models.

4. Technology and engineering firms

Technology and engineering businesses could deploy financing towards equipment, research and development, technology infrastructure, local production and expansion.

This category is important because BOI’s mandate specifically includes engineering and technology.

For Nigerian firms, longer-term capital could help move promising technologies from small-scale operations into commercial production.

But funding does not automatically create a viable technology business. Firms still need skilled workers, reliable infrastructure, market access and customers capable of paying for locally developed products and services.

5. Export-focused businesses

Export-oriented businesses across the eligible sectors could use the financing to increase production, improve product standards, invest in processing and expand distribution into foreign markets.

This could provide one of the clearest routes for the funding to generate foreign-exchange earnings while reducing Nigeria’s dependence on imported finished goods.

But export competitiveness depends on more than access to finance.

High logistics costs, port inefficiencies, electricity expenses, regulatory requirements and difficulties meeting international standards can all reduce the competitiveness of Nigerian products.

What experts say

The case for development finance goes beyond the ₦250bn bond.

Muda Yusuf, Director and Chief Executive Officer of the Centre for the Promotion of Private Enterprise, has argued that development-finance institutions have a specific role because commercial-bank lending rates can make productive-sector investment difficult, particularly in agriculture and other sectors requiring patient capital.

Professor Uche Uwaleke, a Professor of Capital Market, has similarly argued that access to affordable long-term capital remains extremely limited for businesses, particularly SMEs.

But the financing model also faces an important governance test.

Dr Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, has identified inadequate capital, weak banking structures, bureaucracy, political interference and bad loans among the factors capable of undermining development-finance institutions.

The Nigerian Content Development and Monitoring Board has also stressed the importance of rigorous credit assessment, monitoring and recovery to ensure development financing does not become another grant programme.

BOI says it has funded more than one million businesses and disbursed over ₦1.27 trn between 2023 and 2025. It also reported strong financial indicators, including a 39 percent capital adequacy ratio and a 1.7 percent non-performing loan ratio.

But the more important measure of the new capital will be what happens after the money is deployed: how many businesses expand, how much additional production is created, how many sustainable jobs emerge, how much is exported and how much local value is added.

The ₦250bn can address one major constraint facing Nigerian businesses: access to medium- and long-term capital. It cannot, by itself, fix electricity, infrastructure, logistics, skills or other structural constraints.

The real test is whether the bond turns ₦250bn of financing into substantially more productive capacity across the Nigerian economy.