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Difficulty: MediumSpecialized and Development Banks

A promoter intends to set up a modern glass manufacturing factory in Ogun State and requires a 12-year loan facility to import specialized industrial equipment. A commercial bank turned down the application due to the long repayment period required. Which financial institution is specifically mandated to provide this long-term industrial project financing?

  1. Bank of IndustryAnswer
  2. B
    Central Bank of Nigeria
  3. C
    Nigerian Export-Import Bank
  4. D
    Federal Mortgage Bank of Nigeria

Answer

Bank of Industry
The Bank of Industry is mandated to provide medium to long-term funding, equity participation, and concessionary loans to large, medium, and small industrial enterprises in Nigeria.

Step-by-Step Solution

1
Identify the financial requirement
The requirement is a 12-year long-term loan facility for acquiring manufacturing plant equipment.
Commercial banks rely on short-term deposit liabilities and cannot support long-term capital investments without facing maturity mismatch.
2
Match the requirement to institutional mandates
The Bank of Industry is the primary Nigerian development finance institution created to fund industrial expansion, manufacturing, and processing enterprises with long-term loans.
Specialized development banks receive targeted government and institutional capital designed specifically for long-term economic development.

Key Concept

Functions of Development Banks in Nigeria
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Topics

Specialized and Development Banks

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