Stories by Merit Ibe, [email protected]
Manufacturers Association of Nigeria (MAN) and the Association of Small Business Owners of Nigeria (ASBON) have stressed the necessity for the government to collaborate with stakeholders to directly impact authentic manufacturers through its loan disbursements. With a significant gap in the credit market for manufacturing companies and small businesses in Nigeria, industry operators question how businesses can thrive and remain profitable under a 35% interest rate. They argue that access to loans with lower interest rates and more flexible repayment terms would substantially enhance their profitability and ultimately help fortify the economy.
The government’s promises of single-digit loans continue to raise business owners’ hopes.
In his inaugural speech, President Bola Tinubu pledged intervention funds to invigorate Micro, Small, and Medium Enterprises (MSMEs), Nano businesses, and the manufacturing sector. Under this plan, N75 billion was earmarked for MSMEs, with another N75 billion allocated to the manufacturing industry through the Presidential Intervention Fund. Recently, in a nationwide address, the president announced that N1 billion payments were being made to large manufacturers through single-digit interest loans to boost production and economic growth.
Despite these initiatives, some operators claim they have yet to benefit from the schemes or access any intervention funds. Segun Ajayi-Kadir, Director General of the Manufacturers Association of Nigeria (MAN), noted that the loan application and access process is ongoing, with many members applying through the Ministry of Industry, Trade, and Investment. MAN has been engaging with the ministry and the Bank of Industry to track the progress of loan disbursements. “We have copies of their applications for effective follow-up,” Ajayi-Kadir said, emphasising the importance of government collaboration with MAN to effectively reach authentic manufacturers. “We have all the necessary information about the manufacturers, we know where they are and who they are. Our existing peer review and self-monitoring arrangement makes default almost impossible and prevents non-manufacturing entities from accessing the funds. The government can also better track the performance of the loans by working with us”, he added.
Ajayi-Kadir acknowledged that the loan facility reflects the government’s recognition of the credit gap for manufacturing companies in Nigeria. He lamented the high interest rates charged by commercial banks, which, combined with short tenures and difficult conditions, hinder manufacturers’ access to credit, especially for small and medium-scale industries. “They borrow at no less than 35 percent. What type of manufacturing can you do with that kind of interest rate and still be profitable?” he asked, highlighting additional challenges such as high electricity costs, low sales, and competition from smuggled and counterfeit goods.
Ajayi-Kadir urged the government to expedite the implementation of support measures for manufacturers outlined in the stabilisation plan, noting that the success of this fund would boost manufacturers’ confidence. “This is a sterling measure by the administration, and all concerned must make it work and quickly too. This will accelerate the revival of the manufacturing sector, which is beset with multidimensional challenges, and advance the delivery of the government’s economic agenda.”
Femi Egbesola, President of ASBON, pointed out that he has yet to see any beneficiaries of the promised loans and emphasized the importance of accountability and transparency in government programs. Egbesola called for platforms to sensitize the public and track disbursed loans to verify their authenticity. He stressed that the government should collaborate with stakeholders during intervention programs to ensure co-ownership, co-planning, co-monitoring, and co-evaluation. He attributed the failure of past programs to a lack of stakeholder collaboration, noting that without reviews or evaluations, the loans often end up with political business owners rather than genuine operators. “A 15% success rate in loan disbursements is as good as failure,” he remarked.
Addressing ongoing protests, Egbesola decried the additional challenges facing the sector, noting that the country has lost no less than N600 billion in just a few days of protests. He pleaded with the government to establish necessary structures and policies to prevent such unrest. “Government needs to provide structure, policies, and make citizens happy so that there will be no need for protest. That can be achieved by improving the ease of doing business and implementing active policies that support food production.”
