The Bank of Industry, BOI, is boosting the Nations’ Manufacturing Sector with N235 Billion Intervention fund set aside as efforts to refinance, restructure, provide and improve access to credits and loans needed by manufacturers in other to fast track visible development in the economy.
This statement was made recently by the Managing Director of the Bank, Mr. Kayode Pitan at the Association’s 10th CEO’s/MD’s Business Luncheon tagged, “Business Financing In Nigeria: The Bank of Industry Option” in Ogun State. The Managing Director was represented by the State Manager, Mr. Babatunde Ajala who said that various statistics and global assessment on Nigeria’s economy reveals that the country currently made a rebound by 0.55% recovery from recession.
While being optimistic that the country would experience aggressive developments in the forth coming year, Ajala identified, high interest rate, rise in unemployment, systematic corruption, mismanagement of the national resources, religious tensions, political instability, faulty government policies among others as being some potent reasons that led the country to recession.
“Due to the various bottle necks to access funds, stiff policies designed by financial institutions to loans and credits, dart of cash flow in the economy, coupled with the negative effects of recession among others, Nigerian Manufacturers are faced with harsh economic policies and constraints of fund sourcing thereby discouraging production”.
To foster a deepened development across the state, Mr. Ajala said that the State Government have massively invested billions of dollars in gray areas like education, agriculture, solid minerals, manufacturing among others envisaged as potential areas that would improve production quality later in the future, he said. Going the Bank of Industry, BOI, way, a stress free platform different from other financial institutions like commercial banks that attracts a 2-digit on interests, Ajala assured manufacturers that they can access loans and credits from BOI within the shortest period of time as their colleagues have accessed some credits, provided they meet the basic requirement which includes a good realizable business proposal, functional bank statement among others.
Mr. Wale Adegbite, Chairman of Manufacturers Association of Nigeria, Ogun State, said that most manufacturing businesses are financed by either credit facilities or by equity raised in the stock market or investments that bear interest or loans obtained from different sources and establishments.
Adegbite said that obtaining loans from commercial banks in Nigeria has not been easy for manufacturers as the banks prefer to lend short term to businesses with high turn over and higher prospect of giving a quick return on their investment rather than to manufacturers whose investments are usually long term and require continued control and supervision to bring forth returns.
The chairman noted that the cumbersome administrative procedures and administrative procedures and astronomical high interest rates and charges have contributed immensely to the slow pace of development experienced by the manufacturing industry.
“According to Nigeria Bureau of Statistics, it shows that Nigerian economy is gradually coming out of recession with a 1.4% growth in GDP in the 3rd quarter of 2017. However, real GDP growth in the manufacturing sector in the 3rd quarter of 2017 declined by 2.85% (year-on-year). The contribution of manufacturing to Nominal GDP in the current quarter accounted for 8.55%, lower than figures recorded in the corresponding period of 2016 at 8.60% and for second quarter of 2017 at 9.02%.
These figures are ridiculously low when compared to the contribution of manufacturing to GDP in comparable countries like India, Indonesia, South Africa and Egypt where their ratios are 17%, 21%, 13% and 17% respectively”.
All these factors have undoubtedly put a strain on the inability of manufacturers to access loans from the banks and on the growth rate of many other concerns, Adegbite concluded.