‎BOI’s Non-Interest Model: A Strategic Shift for SME Growth
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‎By Ifeanyi Favour Ogochukwu
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‎The Bank of Industry (BOI), Nigeria’s leading development finance institution owned by the Federal Government, has expanded its financing framework with the introduction of a Non-Interest Banking (NIB) window.
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‎Following regulatory approval from the Central Bank of Nigeria (CBN), the initiative has generated public interest and debate, particularly among stakeholders seeking clarity on how the bank will operate and generate revenue without charging conventional interest.
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‎BOI emerged from the merger of the Nigerian Industrial Development Bank (NIDB), the Nigerian Bank for Commerce and Industry (NBCI), and the Nigerian Economic Reconstruction Fund (NERFUND). This consolidation was designed to create a stronger, more efficient institution capable of driving industrialisation and private sector growth through strategic funding sourced from internal capital, government support and external investments.
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‎Over the years, the bank has prioritised long-term financing for businesses, especially Small and Medium Enterprises (SMEs), to stimulate production, job creation and sustainable economic development.
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‎The approval of a non-interest window does not imply a loss of profitability or financial discipline. Rather, non-interest banking replaces conventional interest-based lending with alternative, development-oriented financing structures. Under this model, BOI generates income through profit-sharing arrangements, asset-backed financing, leasing and strategic partnerships instead of fixed interest charges.
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‎This model directly addresses one of the major constraints facing Nigerian businesses: the burden of repaying loans alongside high interest obligations regardless of business performance. By eliminating interest-based pressure, BOI positions itself as a development partner, sharing in project success while supporting business stability and expansion.
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‎For SMEs, the implications are particularly significant. Many viable enterprises fail not due to lack of innovation, but because interest repayments erode working capital before profitability is achieved. Non-interest financing eases cash flow pressure, improves survival rates and promotes more responsible utilisation of funds.
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‎From a broader economic standpoint, the long-term gains are substantial. Businesses supported under non-interest structures are more likely to grow sustainably, create employment and scale industrial output. As these enterprises expand, they enhance tax contributions and economic activity, reinforcing BOI’s core development mandate.
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‎Ultimately, the introduction of a non-interest window reflects innovation, financial inclusion and sustainability. It broadens access to ethical financing, strengthens support for growth-driven enterprises and consolidates BOI’s role as a catalyst for Nigeria’s industrial transformation. Rather than weakening the institution, non-interest financing enhances its developmental impact by enabling businesses to thrive today while contributing more robustly to the nation’s economic future.
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