Breaking News

NACCIMA demands for IPP Fund

By Franklin Alli
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has asked for the establishment of Independent Power Projects (IPPs) Fund by the Federal Government for investors in the sector to access inorder to complete their ongoing projects.

The body of business men  has also stressed the need for the federal government to address the cost of doing business in the coming year (2010).

Speaking on the occasion of a business luncheon organised  by the Industrial /SMI Group of NACCIMA, the Association’s President,  Dr. Simon Okolo, said that the need for an IPP Fund has become crucial as a survey recently conducted by NACCIMA on IPP projects across the country has shown that dearth of funds is now threatening the completion of these projects dotted across the country.

He noted that since the global credit squeeze, and the domestic banking crisis sourcing funds from the financial services sector at home and offshore has become very difficult.

“The global financial crisis has sort of dried up funding prospects for IPPs.  This has slowed down some ongoing projects which should  have been completed by now.”

He said that IPPs are crucial to meeting the country’s energy needs  especially for industrial production.

The funds, if established, should be sourced at a very low interest rates by the investors . “IPP investors can not afford to source funds at high cost due to the nature of power plants that takes a long period between (4 to 8 years )and lots of money to complete.”

He believes the country’s energy needs would be better met by IPPs.   On his assessment of the SMEs sector in the outgoing year, Okolo, observed that very little has been done by various governments to support the sector and this has led SMEs to be operating in a difficult business environment and very hard time.

The sector, he said, is being faced by multi problems such as excessive tax burden, high cost of compliance with regulators, extortion and harassment of companies by tax authorities He also noted that  operators in the sector have neither easy access to credit facility nor the capacity to attract various forms of capital said to be available to them through the commercial banks and the Bank of Industry.

“The financial sector considers SMEs unacceptable credit risk, while the venture capital companies impact on the SMEs are yet to have any positive effect on the sector.  SMEs are also not considered attractive for such other financial products like leasing, supplier credit, insurance and trade finance .  The large companies through no fault of theirs, appear to crowd-out SMEs in the acces to these products and services.

As a result, SMEs are subjected to unfavourable business climate and environment.  As with the case of capital, many SMES do not appear to have the capacity to take advantage of professional services support .  Most of them can not afford the cost of professional services like legal, finance, marketing and engineering services.

SMEs, therefore, are constrained in having the appropriate managerial and technical know-how to manage their business.

The critical constraint is not availability of these services but being able to afford them. Many SMEs are unable to access the internet and hook up with the rest of the world.  Therefore, information on foreign market and current production technologies are not easily available to them. The situation with information about the local market is not particularly better.

The poor statistics and other business information on the local market situation also affect local linkage opportunities for SMEs.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.