Call for N1tn Stabilisation Fund to Support Manufacturing Sector
The Manufacturers Association of Nigeria (MAN) has urged the Federal Government to approve a N1tn stabilisation fund aimed at supporting the manufacturing sector. The initiative is seen as crucial in mitigating the effects of high interest rates and rising production costs on local industries. This call was made by Segun Ajayi-Kadir, the Director-General of MAN, during a recent media briefing in Lagos.
Ajayi-Kadir confirmed that the N75bn allocated under the Federal Government’s Presidential Palliative Programme had been fully disbursed to manufacturers. He highlighted the importance of this funding, stating that it had been distributed with the involvement of MAN members. Even when there were uncertainties about the beneficiaries’ status, the association worked closely with the Bank of Industry to verify their authenticity.
Demonstrating Capacity and Responsibility
The successful management of the N75bn loan showcased the manufacturers’ ability to responsibly handle government interventions. Ajayi-Kadir emphasized that this performance justifies the need for the immediate release of the N1tn stabilisation fund. He argued that if the government releases this fund, its impact would be both positive and immediate.
Despite recent monetary policy adjustments, Ajayi-Kadir pointed out that lending rates remain prohibitively high for manufacturers. He noted that the average entry rate is still above 30 per cent, making it unwise for many manufacturers to borrow from commercial banks. As a result, several members are reducing their reliance on loans due to the heavy interest burden.
Exploring Alternative Financing Options
While exploring alternative financing options such as the capital market, Ajayi-Kadir stressed that high borrowing costs continue to undermine the competitiveness of manufacturers both locally and internationally. The association is advocating for the launch of a Manufacturing Refinancing and Rediscounting Facility. This facility would allow banks to refinance approved manufacturing loans at single-digit rates for up to seven years.
Additionally, MAN recommends the creation of a publicly accessible dashboard to track lending flows, interest rate spreads, loan approvals, and sectoral disbursements in real time. These measures are intended to reduce borrowing costs, boost output, and sustain jobs in the manufacturing sector.
Recommendations for Sustainable Growth
In addition to the call for the N1tn stabilisation fund, MAN has also requested that the Central Bank of Nigeria increase the capital base of the Bank of Industry to meet the credit demand of industries. This move is expected to provide much-needed support to manufacturers facing financial challenges.
Background on the N75bn Loan
In November 2024, reports indicated that the Federal Government began disbursing the N75bn loan to manufacturers through the Bank of Industry at a nine per cent annual interest rate. This initiative, announced over a year earlier, was designed to help large companies manage production costs and support economic growth under the Presidential Palliative Programme.