By Yinka Kolawole

The President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, has appealed to the federal government for a N1 trillion intervention fund that the manufacturing sector can access at a single digit interest rate.   

Meshioye made the call in an interview on Arise News TV, while lamenting the rapid increase in interest rates charged by commercial banks on loans, which rose to 35 percent in the second quarter of the year (Q2’24).

“This is not even good for the economy, and it’s very bad for the manufacturing sector. It was around 25% thereabout some time ago, going up to about 35. Currently, it’s reading between 32 and 37%. You will find a very few banks who will give it to you at 32/33, but oftentimes, it is 35-37%. You will agree with me that this means that the cost of funding has again jumped up to all businesses, and the impact on the manufacturing sector is very enormous,” he stated.

The MAN President acknowledged the role of the government in trying to improve this situation.

“The administrations have tried to pull a few things in the pipeline which makes us hopeful, like the withholding tax. Manufacturers will not be paying withholding tax which is very good. This means that we could have some funds which would have hitherto been withheld available for businesses. But this is not really sufficient because it’s just a percentage.

 “We also thank the government for the intervention fund of N75 billion introduced about a year ago, which is the offering which we’re trying to access. We have applied to an extent, some of our members.

“But this is not really anything to go by because we need much more than that, maybe about a trillion naira that is being discussed about, that will be fine, and we should be involved in this strategy on how to deploy to manufacturers to ensure that those who will be benefiting from whatever special funds available will be manufacturers indeed. And when I say intervention, get me right, we are talking of loans that are affordable at single digit interest rate, not like anything else.

“If this happens, then that will be a way to cushion the effect of the problem that manufacturers are facing today. But loan alone is not sufficient, mind you. Loan within a very turbulent environment will do little. It will be helpful, but it will only do a little. There should be deliberate efforts to improve the myriads of infrastructure problems that we have inherited and still have up to date. It is imperative that this be addressed contentiously and with a high sense of focus so that we will have an enabling environment that works.”