CBN should strategise on implementation of intervention fund-MAN

The Central Bank of Nigeria (CBN) and the Government regularly announce one intervention funding window after another to grant single digit interest to the manufacturing firms and some other sectors, yet the country’s manufacturing sector, like many other sectors, have complained of high interest rate on borrowed funds and innumerable other challenges such that many of the local manufacturing firms have either closed shops, relocated out of the country or still operate at low capacity utilization. Tony Nwakaegho writes on MAN comments on the challenges and the way forward.

The Nigerian manufacturing sector has also witnessed sundry transitions following the various administrations that has governed this country that come with various policies without recourse to implementation and continuity.

Nigerian manufacturing sector was well known with their products due to the industrial estates that were formally domiciled at Oregun, Ogba, Ikeja, Apapa, Ikorodu, Aba, Enugu, Kano, Kaduna in the early 70’s.

These industrial hubs created direct and indirect employments and generated wealth for both their owners and government.

Sadly, some of these industrial hubs have closed down due poor government policies and lack of support to the manufacturing sector, lack of stable power supply, infrastructure decay and the penchant for foreign manufacturers and products.

Investigations have revealed that most of those industrial estates, especially at Oregun and their massive warehouses have become places of worship to religious groups while some in other parts of the country have relocated to Ghana and other West Africa Countries where they feel  they will offers them more conductive environment to carry out their businesses.

As a result this closure in the manufacturing industries like Asaba Textile mill in Delta State, among others the successive administrations of former Presidents Olusegun Obasanjo, Goodluck Ebele Jonathan and Muhammadu Buhari, for the past two decades, through the Central Bank of Nigeria, (CBN) came up with myriad of intervention funds to the country’s manufacturing firms to alleviate the funding challenges, but those interventions were marred by a lot of challenges that have impeded the growth of the manufacturing industries.

Despite this CBN interventions, the double digit interest rates charged by the local Deposit Money Banks (MDBs) and Development Banks (DBs) have remained unresolved issues, while the local manufacturers have continued to cry over lack of long term single interest window.

The Manufacturers Association of Nigeria (MAN), through Director General, Segun Ajayi- Kadir, noted that the ideas behind the policy remain brilliant but the implementation has been very poor.

Ajayi- Kadir explained that the funds were in reality provided but his members were unable to access them due to the various bottlenecks put in place by the DMBs and the development Banks.

He mentioned the N1 trillion “Covid-19 stimulus” Package for manufacturing and import substitution 2020 announced by CBN as directed by President Buhari as an example, adding that only N300 billion out of the N1 trillion have seemingly been accessed by its members.

Ajayi- Kadir said “MAN observed through feedbacks from members and interactions with CBN on several occasions that these facilities and funds have not been adequately accessible to the manufacturers, due mainly to the prevarications of the DMBs.”

The DG MAN, while commenting on the success rate of the stimulus, said that the “intervention funds are critical to driving manufacturing investment and by extension, production. This is because the single digit interest rate for development funds far contrasts the more than 25% rate charged by commercial banks.

“The various CBN’s funding windows are highly commendable but the poor implementation hinders the attainment of the noble objectives of these funds. Manufacturers hardly access these funds.”

He charged the government and the CBN to ensure that those whom the sectors’ intervention funds are meant for are able to access them, rather than for the banks to convert the funds to their use.

On his part, the Chairman of National Association of Small and Medium Enterprises (NASME) Lagos branch, Dr Adebayo Olu Adams, speaking at an event organised by the Commerce and Industry Correspondents Association of Nigeria (CICAN) in Lagos recently, confirmed that his members were unable to access the N220 billion for Micro, Small and Medium Enterprises Development Fund (MSMED) which the Federal government provided to cushion the effects of the Covid-19 pandemic, due to the rigid conditions  from the banks who were mandated to disburse funds.

According to him, only few of their members have gotten a faction of the funds, while the majority has not been fortunate with their applications.

Other stakeholders in the industry also expressed their frustration that the government and CBN deem it wise to provide intervention funds for the sectors, but the anticipated beneficiaries find it very frustrating and are unable to access the funds.

They urged the government and CBN to tackle the problem by ensuring the umbrella bodies such as the Manufacturers Association of Nigeria (MAN), National Association of Chambers of Commerce Industry, Mines and Agriculture (NACCIMA), National Association of Small and Medium Industries (NASSI), National Association Small and Medium Enterprises (NASME) and other trusted associations are deployed in the disbursement of future intervention funds.

According to them the associations know their genuine members more than the banks, stressing that the DMBs which is making things very difficult for the local manufacturers can’t say they are more truthful or love Nigeria more than us (Manufacturers) or other sectors.

They recalled that the N500 billion the administration of President Jonathan put in place to revive the country’s comatose textile sector  also didn’t achieve the aim due to banks’ perverse attitude.

They also blamed corruption on the part of the local lending banks who collaborate with some officials of CBN to scuttle government’s and CBN’s good intentions for the troubled sectors.

MAN has continued to appeal to the government and CBN to see to the strategic implementation of the intervention fund in order to put the manufacturing sector in Nigeria on a sound footing and for all the moribund industries to be revived.