The business of beauty and skin care in Nigeria is currently dominated by foreign brands. Although local players have become more prominent and gained some market share in the past few years, there’s still some way to go before domestic cosmetics and beauty products producers close the gap between them and their transnational competitors.
It’s partly because of this state of affairs that the Bank of Industry (BOI) runs a fund for businesses in the skin care industry. The government backed financial institution is supporting small, medium and large scale manufacturers in this space to enable them expand operations and boost productivity. If your business belongs in this category, you could benefit from this grant too.
What the fund should achieve
The BOI has set its sights on improving the quantity and quality of output churned out by local beauty and hygiene product producers by helping them modernize their production processes. The key component of this plan is to facilitate the procurement of modern equipment and working capital from beyond the country’s shores (where such equipment is manufactured). It’s also expected that local beauty products producers will strengthen enough to venture into the wider West African market.
The initiators of this fund are also looking to create jobs with it; they estimate that a typical small scale factory creates anywhere between 20 and 70 jobs. The hope is that as new production processes are adopted, opportunities for job seekers will open up within the company and for roles indirectly connected to the growing business.
Businesses that are eligible to apply for a grant from the BOI include producers of skin care creams, lotions, hair gels, deodorants, powders, perfumes, lipsticks, finger nail and toe nail polishes, eye and facial makeup. Producers of bath oils, baby products, bubble baths and bath salts can also submit applications. Such businesses must be based in Nigeria and meet the basic requirements expected of a legally recognized corporate entity operating within the country’s borders.
Fees and loan disbursement method
Loans of between ₦5 million and ₦500 million may be given to producers whose loan applications have been approved. They are disbursed through Letters of Credit which are guarantees of payment by the BOI to the bank of the raw materials and equipment supplier from which the loan beneficiary is supposed to obtain production input.
An interest rate of 9% per annum applies to this fund, as does a 1% processing fee. The loan tenor, which begins after a 6-12 month moratorium (free of repayments), lasts for between 3 1/2 and 7 years.