Nigeria launched a fund with an initial value of $200 million to support local oil and gas firms Thursday, Emmanuel Kachikwu, the country’s oil minister of state for Petroleum said, asserting that the move serves as part of a government drive to improve access to low-cost credit across the economy.
The Nigerian Content Development Fund (NCDF) would be financed through allocating the fund one percent of the value of all contracts awarded in the state-run upstream oil and gas industry, Petroleum Ministry said.
Oil sales make up about two-thirds of national revenues in Africa’s biggest economy, which is in its first recession in 25 years largely caused by low global crude prices.
The new fund, according to the report by Reuters, would offer finance to energy firms setting up manufacturing facilities or acquiring assets such as oil rigs, ministry officials said. It would also offer project financing and help refinance existing loans, they said.
“I would like to see this fund going to cutting edge, tech-driven businesses,” Oil Minister commented, in the country’s capital, Abuja, to launch the fund.
The goal was to increase the size of the fund to $1 billion, he said, without giving a timeframe.
Firms would be able to borrow up to $10 million for a single project or investment at single digit interest rates over five years, officials said. Typically, a commercial bank would charge double digit interest rates in Nigeria.
The Nigerian Content Development and Monitoring Board (NCDMB) would manage the fund alongside the state-run Bank of Industry, officials said.