…Seek special funding lifeline
By Merit Ibe
Nigeria’s manufacturing sector is currently choked by the weight of an estimated N2 trillion worth of unsold goods.
The troubling stockpile has been accentuated by weak consumer demand, high production costs, inflation and limited access to credit.
Industry players are now calling on the Federal Government and financial institutions to create special funding windows to help firms stay afloat and stimulate growth in the real sector.
Leading the call is the Manufacturers Association of Nigeria (MAN) as it tasks the government to urgently reel out policy interventions that will galvanise economic stability, improve infrastructure and ease the cost of doing business to support the struggling manufacturing sector.
Director General of MAN, Segun Ajayi-Kadir, had raised concerns over the burden of high interest rates on the nation’s manufacturing sector, warning that the trend leaves Nigerian producers at a competitive disadvantage compared to their global counterparts.
“High interest rates are crippling competitiveness in the sector, Ajayi-Kadir said, calling for lower lending rates and special financing windows to boost industrial growth
He welcomed the recent 50 basis points cut in the Monetary Policy Rate (MPR) by the Central Bank of Nigeria (CBN), describing it as a positive step that could pave the way for further reductions in lending rates.
He, however, lamented that manufacturers have struggled with elevated borrowing costs for more than five years, driven largely by the apex bank’s aggressive tightening stance.
“With recent reforms moderating inflation, stabilising the exchange rate, and improving investor confidence, the timing is right for the central bank to gradually relax rates,” Ajayi-Kadir stated.
“We are definitely looking forward to further reduction. If you give a manufacturer anything more than 5 per cent to pay as interest, competitiveness is compromised, as our rivals are borrowing at much lower rates. You are not going to get anything out of it because those with whom you compete are not borrowing at that rate,” he added.
Ajayi-Kadir further called for a special financing window tailored to manufacturers, enabling them to access loans at rates below the MPR. He stressed that such a move is crucial for driving industrial growth and urged the CBN to make an intentional decision that would encourage commercial banks to lend more to manufacturers, thereby supporting broader economic expansion..
“We need a special window that will be able to give manufacturers lower rates than the MPR and I will say this is key for manufacturing growth.”
Recently, the Monetary Policy Committee (MPC) of the CBN reduced the MPR from 27.5 per cent to 27 per cent. It also adjusted the asymmetric corridor around the rate to +250 and -250 basis points, down from the previous +500/-100 basis points.
“We are battling N2 trillion unsold inventory as disposable income keeps dwindling every day. This is a major problem for manufacturers,” he lamented,” the DG decried.
Other factors contributing to this crisis include rising operating costs, a depreciating Naira, high-interest rates, inconsistent electricity supply, and poor infrastructure.
These challenges are straining profitability, causing job losses, and hindering the sector’s overall growth and contribution to the Nigerian economy.
