International rating firm Fitch Ratings has said that the new ‘Nigeria First’ economic policy will unlock major growth opportunities for the Bank of Industry.

This was contained in the latest rating commentary on the development bank, which was issued by the rating company, where it affirmed BoI’s Long-Term Issuer Default Rating at ‘B’ and its National Long-Term Rating at ‘AAA(nga)’ with a stable outlook.

Earlier in May, the Federal Executive Council approved the ‘Nigeria First’ policy, aimed at strengthening the economy, prioritising local industries, and boosting the country’s industrial transformation.

This includes targeted funding for entrepreneurs and micro, small, and medium-sized enterprises, of which N50bn for grants, N75bn for MSMEs, and N75bn for manufacturing will be channelled through the BoI.

BoI is Nigeria’s main development bank, mandated with financing the country’s industrial sector and promoting financial inclusion and employment.

Fitch said, “BoI provides low-cost, long-term financing to micro, SMEs, and corporates through direct customer loans and customer loans granted at preferential rates and guaranteed by domestic banks. The bank’s strategy is linked to public policy, including the country’s industrialisation and import-substitution initiatives. The ‘Nigeria First’ economic policy will provide big growth opportunities for BoI.”

On the metrics of the development bank, Fitch said, “Given its development mandate, BOI targets some vulnerable segments of the economy. The bank lends to priority and emerging sectors typically underserved by other financial institutions. Nevertheless, adequate underwriting standards and risk controls mitigate risks associated with this type of lending as reflected in BOI’s sound asset quality metrics.


“BOI’s Stage 3 loans ratio remains well below the sector average of around 5%, despite targeting vulnerable segments of the economy. We view reserve coverage of Stage 3 loans as reasonable, while the loan book is highly collateralised. Profitability is healthy, despite not being a key objective for BOI.

“In 2024, return on equity improved from 2023, driven by strong gains on derivatives and lower impairment charges. The net interest margin compares favourably with that of commercial banks, as its lower funding costs offset lower loan yields.”

However, Fitch holds the view that the authorities’ ability to support BOI was limited, as indicated by Nigeria’s ‘B’ Long-Term IDR. This view is despite its admission that the Nigerian authorities have a high propensity to support BoI, given its 99.9 per cent state ownership and well-established and clearly defined policy role.

In April, Nigeria’s Long-Term IDR was upgraded to ‘B’ on stabilised exchange rate, profitability, improvement in foreign-currency liquidity, and capital raisings are driving a recovery in the bank sector’s capitalisation.

Despite these positives, Fitch said that inflation remained high, regulatory intervention burdensome, and expiring forbearance on oil and gas loans will lead to an increase in impaired loans (Stage 3 loans under IFRS 9) ratios and prudential provisions.