Bank guarantees from commercial banks are becoming much more popular as a financing instrument in Nigeria, according a senior officer at the country's oldest and largest development financing institution.

Sonny Ekedayen, who heads the Lagos zonal office of the Bank of Industry (BoI), presented this view at a recent forum organised by the Academy for Entrepreneurial Studies in Lagos.

Bank provision

Ekedayen reckons that most Nigerian commercial banks now readily provide guarantees to long-term customers who have a good credit history.

Some customers, however, are still required to provide collateral for the bank to provide a guarantee, he added.

BoI role

The BoI does not itself provide bank guarantees but it does fund the commercial banks that offer them.

The BoI mainly funds asset purchases, typically of plant and machinery.

It aims to play an integral role in Nigeria's economic development plans by creating over one million jobs through its various programmes over the next three years.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.