N1trn intervention fund: Manufacturers call for stronger govt support amid rising borrowing costs
By Esther Agbo
President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, has called on the federal government to enhance its support for the manufacturing sector beyond the proposed N1 trillion intervention fund.
While acknowledging that the fund, offered at a single-digit interest rate, represents a positive initiative, Meshioye argues that it is insufficient to address the complex challenges faced by manufacturers.
Meshioye expressed concern over the sharp increase in interest rates imposed by commercial banks, which have soared to as high as 35 percent in the second quarter of 2024, up from 25 percent in previous periods.
He warned that these escalating borrowing costs are harmful to the manufacturing sector and could impede economic growth.
“The rise in interest rates from around 25 percent to between 32 and 37 percent is extremely detrimental,” he said. “The cost of funding has significantly jumped, imposing a heavy burden on businesses, particularly in manufacturing.”
While the government has made efforts to support manufacturers, including exempting them from withholding tax and introducing a N75 billion intervention fund last year, Meshioye stressed that these measures fall short.
He called for a more comprehensive strategy that includes significant financial support and greater involvement of manufacturers in decision-making processes. “We need more than the proposed fund; about a trillion naira would be ideal. Additionally, the strategy for deploying these funds should ensure that they effectively benefit manufacturers. Loans must be affordable, with single-digit interest rates, to truly make a difference.”
Meshioye emphasised that while loans are helpful, they alone are not enough. He highlighted the need for substantial improvements in infrastructure to create a conducive environment for manufacturing growth.
“Loans within a turbulent environment offer limited relief. A holistic approach combining financial intervention with infrastructure development is crucial to address the myriad of inherited and ongoing infrastructure issues,” he said.
Meshioye urged the government to adopt a comprehensive strategy that integrates financial support with targeted infrastructure improvements to foster a supportive environment for the manufacturing sector’s growth.
