Manufacturers still suffer dual challenges of scarcity of investible funds and high lending rate says MAN DG

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“No doubt, development funds are critical to driving manufacturing investment and by extension, production.”

 

The Manufacturers Association of Nigeria (MAN) said the inclement macroeconomic environment in Nigeria has constrained the performance of the manufacturing sector. The Association noted that particularly, with the triadic rates: high and rising inflation rate, double digit lending rate and unfavourable exchange rate parity. The Director General, Segun Ajayi-Kadir mni stressed that the regulatory environment is harsh and induces high business operating cost in the economy. There is also infrastructure deficit which our businesses contend with.

The MAN DG Stated this in press statement titled Comment of MAN On CBN Intervention Fund For Manufacturers And Naira 4 Dollar Scheme that as a result of the high cost business environment, the manufacturing sector has persistently suffered low-price competitiveness as plethora of close substitute to Nigerian manufactured products are officially imported into the country while some others are smuggled in through the land borders.

 

 

He said in order to assuage the high cost manufacturing environment and improve the competitiveness of Nigerian manufactured products, funding at liberal lending rate (single digit) became critical.  According to him, this explains why the Central Bank of Nigeria (CBN) created several development funding windows with “single digit” interest rates to support real productive businesses including manufacturing.

 

“However, notwithstanding the availability of these funding windows, manufacturers still suffer the dual challenges of scarcity of investible funds and high lending rate.

For instance, Ajayi-Kadir pointed out that the N1Trillion COVID-19 Stimulus for Manufacturing and Import    Substitution, 2020, a stimulus that was aimed at sustaining the manufacturing and improving output of the sector.

He said MAN observed through feedbacks from members and interaction with the CBN on several occasions that these facilities and funds have not been adequately accessible to manufacturers due mainly to the prevarication of the PFIs and MDBs.

 

MAN, while acknowledging the excellent initiative of the CBN in setting up the N1 trillion COVID-19 stimulus facilities for manufacturing and import substitution, observed    that most of its members who applied were not able to get it, DG MAN.  According to the CBN, he said only 76 companies have received N300 billion, which translates to 30%, in one year. Intriguingly, according to our members, the banks are claiming that they have not received the framework for the administration of the facility from the CBN.

 

“As the umbrella organization of manufacturers in Nigeria, MAN hereby indicates its interest and solicits CBN’s consideration to be part of the monitoring process

 

Difficult Access to Funds:

 

MAN in the report Implore the CBN to intervene directly to ensure that manufacturers have access the funds, particularly the N1trillion COVID-19 Stimulus Package.

 

“Sensitize manufacturers on the current feasibility of the N220 billion for Micro, Small and Medium Enterprises Development Fund (MSMED) and N300 billion for Real Sector Support Facilities (RSSF) and how they can be accessed

 

“Carry out coordinated reduction in monetary policy rate and lending rate

 

“Provide a Credit guarantee for industrial loans from commercial banks


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