•Association recommends BoI to distribute intervention fund
•Chamber commends presidential initiatives to kickstart economic growth, improved productivity
•Expresses concern that plans to improve security was unmentioned
The Manufacturers Association of Nigeria (MAN) has described President Bola Ahmed Tinubu’s pledge to provide N75 billion to 75 manufacturing concerns at nine per cent interest rate and N125 billion to Small and Medium Industries (SMIs) as a good start in addressing the scarcity of loanable funds for businesses in the face of rising Monetary Policy Rate (MPR) of the Central Bank of Nigeria (CBN).
Similarly, the Lagos Chamber of Commerce and Industry (LCCI) commended Tinubu’s efforts to kick-start sustainable economic growth and improved productivity.
They stated these in separate statements made available to THISDAY, in reaction to the president’s national broadcast.
According to MAN, the assurances contained in Tinubu’s national broadcast on Monday, represented part of the follow-up measures it had asked for, which demonstrated that the president was listening to, and addressing, the complaints of Nigerian manufacturers.
The views were expressed by the Director General of MAN, Mr. Segun Ajayi-Kadir, in the reaction to the president’s national broadcast, who identified the Bank of Industry (BoI) as a suitable vehicle for channeling the funds to the large manufacturers and the SMIs.
Tinubu, in his broadcast, had said in order to strengthen the manufacturing sector and increase its capacity to expand and create good paying jobs, “we are going to spend N75 billion between July 2023 and March 2024. Our objective is to fund 75 enterprises with great potential to kick-start a sustainable economic growth, accelerate structural transformation and improve productivity.
“Each of the 75 manufacturing enterprises will be able to access N1billion credit at 9.0 per cent per annum with maximum of 60 months repayment for long term loans and 12 months for working capital.
“Our administration recognises the importance of micro, small and medium-sized enterprises and the informal sector as drivers of growth. We are going to energise this very important sector with N125 billion.”
Reacting to the president’s broadcast, Ajayi-Kadir said it was, “quite interesting that the president’s promised that N75 billion will be spent within the next eight months to fund productivity, enhance sustainable growth and accelerate transformation in the manufacturing sector.
“The promise that 75 manufacturing enterprises will access N1billion credit at 9.0 per cent interest rate per annum and working capital is commendable. It is a good start to begin to address the dearth of loanable funds in the face of rising lending rate occasioned by the continued increase in the MPR by the CBN.”
He also noted that the small and medium scale enterprises were the most affected by the prevailing economic downturn as access to credit is a major challenge for the SMI.
“So the allocation of N125 billion to energise the segment (SMIs) will give fillip to their businesses and help overcome the paucity of funds occasioned by low capacity utilisation and unprecedented low sales in recent times,” he added.
He, however, advised federal government to carefully select the vehicles for the delivery of these loans.
“It is, however, very important and critical that the vehicles for the delivery of these loans should be carefully selected and the implementation diligently monitored. The Bank of Industry has shown excellent performance as an appropriate transaction structure for such facilities,” Ajayi-Kadir said.
The MAN also pointed out to the government that it was equally important to ensure that the promised 3000 units of 20-seater buses should be procured from indigenous automobile industries.
It said: “This is a golden opportunity for the federal government to demonstrate unfailing commitment to the implementation of the subsisting Executive Order 003, which prioritises the patronage of made in Nigeria products.
“Additionally, we expect that other attendant challenges, including the calculation of the import duty for production inputs at the floated rate and the continued denomination of the gas price in dollars should be discontinued.
“This will help to bring down rising costs of production and ameliorate the lackluster performance of the manufacturing sector. It will help avert an unprecedented upward swing in the price of domestic products and an escalation of the pervading low consumer apathy.”
MAN also said the speech by the president demonstrated his appreciation of the downside of his recent economic policy measures of his new administration.
“So, the assurances contained in the speech of Mr. President represent part of the follow-up measures we asked for.
“We had indicated that the best palliative is to remove the binding constraints that have bedeviled the productive sector so that jobs can be created and guaranteed, salaries can be paid and production capacity boosted, with the attendant lower prices and improved availability. This is far more beneficial than palliatives that would only give nominal relief,” MAN said.
On its part, the President of the LCCI, Dr. Michael Olawale-Cole, also commended Tinubu on the content of his broadcast.
Olawale-Cole described the plan to spend the N500 billion ($652 million) package to boost the economy by easing transportation costs, boosting manufacturing, and enhancing food supply and the provision of conditional grants to at least a million small businesses as a clear demonstration that the president has listening ears.
He, however, pointed out that 75 companies would be too small to make significant impact on the economy and expressed concern that nothing was said in the broadcast about the large scale insecurity prevailing in the country.
He said: “These plans demonstrate that Mr. President is listening to Nigerians. The Chamber supports the move to invest in the manufacturing sector. However, it would be pertinent to consider more enterprises as 75 enterprises would not significantly impact the economy.
“However, we commend the effort to kick-start sustainable economic growth and improve productivity. We believe that if this plan is rigorously pursued, economic growth through the real sector of the economy would be achieved and could revive Nigeria’s sluggish industrialisation and expand the GDP.”
He, however, advised the government to closely monitor the banking sector in the provision of these loan facilities so that the eventual cost of funds would not be above 9.0 per cent from other banking fees and charges.
“It may be judicious to stipulate that the total costs of funds be benchmarked at 9.0 per cent regardless of the charges and fees,” he said.
The chamber, however, expressed concerns about the role of the state and local governments and transparency in the implementation of the palliative strategies that included the government’s plans to introduce an Infrastructure Support Fund (ISF) for the states to invest in critical areas and revamp healthcare and educational infrastructure.
It said: “We urge the government to ensure smooth and promising implementation of the measures and regularly engage the citizens and the organised private sector to ensure accountability.
“There should be proper monitoring and evaluation of the implementation process to ensure benefits to the people.
“We also wish to nudge the government to share in the sacrifice made by Nigerians by reducing the high cost of governance in all its tiers and ensuring fiscal leakages and corruption are strategically dealt with.
“As we commend the government’s courage in enacting a series of policies, we trust that government would be courageous enough to cut the cost of governance.
“This will demonstrate to Nigerians that the leaders share in the suffering and sacrifice of the people. The perks available to public office holders are so enormous that it is difficult for the average Nigerian to understand why they suffer so much and those in leadership are unaffected.
“We urge Mr. President to do the needful, and we expect further announcements on the measure to cut the cost of governance.”
Olawale-Cole also noted with concern that security was not given a mention in the president’s broadcast, adding that, “security has not been given sufficient attention. It is also of utmost importance to deal with the issue of insecurity because, without security, there can be no prosperity. If the issue of insecurity is not adequately dealt with, the implementation of these strategies could be in jeopardy.”
He also urged Nigerians to exercise some patience, as emphasised by President Tinubu.
According to him, “the degradation of our economy has occurred over several decades and it cannot be reversed within a few short months. It would take a concerted effort by all and focus on the strategic alignment of our national goals for change to occur.
“In reality, it is inevitable that we suffer some pain for these reforms to be successfully implemented. We all want a better and brighter future for Nigeria, so let us work together to make it happen.”