THE Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, says the seeming delay by the Federal government to extend the proposed N75 billion loan facilities to manufacturers is “worrisome.”
Ajayi-Kadir expressed his concern while speaking at Channels Television’s Sunrise Daily on Wednesday, October 4.
“It is worrisome,” he said, adding, “I believe that the process is ongoing, but it is slow.”
President Bola Tinubu, in a nationwide broadcast on July 31, had promised to strengthen the manufacturing sector by providing N75 billion to 75 manufacturers between July and March next year.
The loan is expected to cushion the impact of the fuel subsidy regime and exchange rate unification on the manufacturing sector.
In his speech, the President said, “To strengthen the manufacturing sector, increase its capacity to expand and create good paying jobs, we will spend N75 billion between July 2023 and March 2024.
“Our objective is to fund 75 enterprises with great potential to kick-start sustainable economic growth, accelerate structural transformation and improve productivity.”
According to him, 75 manufacturing enterprises can access N1 billion credit at an interest of nine per cent per annum with a maximum of 60 months of repayment for long-term loans and 12 months for working capital.
In the broadcast, Tinubu promised to energise Micro, Small and Medium-sized Enterprises (MSMEs) with an N125 billion loan facility to drive the informal sector’s growth.
“We would have expected that by now it (the fund) could be out, and manufacturers and MSMEs have started to enjoy the facility,” Ajayi-Kadir said.
He hinted that the association could provide its members’ identities – names, profiles, locations and other requirements – to the government to hasten the process.
“It is better late than never; now the government should expedite action to ensure these facilities are available, particularly with the agreement with labour.
“My critical point here, which I don’t want to miss, is that even the N75 billion and N125 billion will not address the credit crisis in the manufacturing sector,” he said.
Besides, Ajayi-Kadir said that the manufacturing sector needed a more permanent solution or a deliberate attempt to prioritise loan facilities given at an interest rate that would enable manufacturers to repay.
On the suspension of value-added tax (VAT) on diesel, Ajayi-Kadir said the step was positive but that the government had to look beyond the six-month projection.
The labour unions and the government had, in a 15-point agreement, decided to suspend the collection of VAT on diesel beginning in October.
He noted that diesel was required as an input cost from transporting raw material production processes to transporting finished to the markets.
“These input costs have negatively affected the manufacturer’s production costs and disrupted logistics.
“If the price of diesel is reduced with the suspension of VAT, it will assist in bringing down the production cost, which also means that when the finished products get to the market, they will come at lower prices,” he explained.
Coupled with the promise of the new government to revamp the refineries, Ajayi-Kadir believes additional steps to make diesel more affordable will resolve part of the challenges in the energy sector, not just for the manufacturing industry but for the benefit of the entire economy.
Meanwhile, a finance expert and development economist, Kelvin Emmanuel, had told The ICIR that the N75 billion to 75 manufacturers was not a welcome development.