PRESIDENT Bola Tinubu’s promise to provide funds to manufacturers and micro, small, and medium-sized enterprises (MSMEs) to drive the country’s productivity sectors has failed to meet the set target.

Read the series “Tinubu’s one year in office” here.

On a nationwide broadcast on July 31, 2023, the Nigerian President said he would provide N200 billion to strengthen the country’s manufacturing and MSMEs.

The promise came following public outcry over the impacts of fuel subsidy removal and the foreign exchange unification he doggedly introduced.

Upon assuming office on May 29, 2023, Tinubu said fuel subsidy was gone, and the Central Bank of Nigeria (CBN), under his watch, floated the exchange rate in July.

The twin reforms have suffocated business operations and made the business environment difficult for manufacturers and MSMEs.

The palliatives were meant to provide N75 billion to manufacturers and N125 billion to MSMEs and be executed between July 2023 and March 2024.

“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.

“Each of the 75 manufacturing enterprises will be able to access N1 Billion credit at 9% per annum with maximum of 60 months repayment for long term loans and 12 months for working capital, Tinubu said.

On MSMEs, he promised, “Our administration recognises the importance of micro, small and medium-sized enterprises and the informal sector as drivers of growth. We are going to energise this very important sector with N125 billion.”

President Tinubu also announced that his administration would fund 100,000 MSMEs and start-ups with N75 billion; however, as of the time this report was written, these promises had yet to be fulfilled.

Many groups and associations have raised concerns about the President’s soothing for MSMEs, manufacturing, and other sectors of the economy.

In various reports, the Manufacturers Association of Nigeria (MAN), Association of Small Business Owners of Nigeria (ASBON), Nigerian Association of Small Scale Industrialists, Nigerian Association of Small and Medium Enterprises (NASME), Association of Micro-Entrepreneurs of Nigeria (AMEN), and the Lagos Chamber of Commerce and Industry (LCCI) have said the only information they had about the fund was the President’s pronouncement.

They had equally expressed concerns about the criteria for disbursement, the requirements, terms and conditions, prospects and the agencies that would disburse the funds.

The proposed palliative was expected to help cushion the reforms’ effects and drive the country’s productivity sectors.

Challenges of the manufacturing, MSME sectors

With the removal of the fuel subsidy and the unification of the exchange rate, the manufacturing and MSME sectors have been operating under high energy and increasing raw materials costs amid other headwinds.

The latest report from the National Bureau of Statistics (NBS) reveals that as of the fourth quarter of 2023, the manufacturing sector’s real GDP growth stood at 1.38 per cent, lower than 2.45 per cent in the same quarter of 2022.

Its real contribution to GDP was 8.23 per cent, lower than the 8.40 per cent recorded in Q4 2022.

In a statement in March 2024, MAN declared that 767 manufacturers shut down operations while 335 became distressed in 2023.

The MSMEs also faced similar challenges and multiple hurdles in establishing and growing sustainable enterprises, with the need for appropriate forms of finance often ranked as the most severe constraint. 

According to a survey conducted by the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) and the National Bureau of Statistics (NBS), the number of businesses under MSMEs is estimated at 39.6 million.

In 2022, MSMEs contributed 48 per cent to GDP and accounted for 96 per cent of businesses and 84 per cent of employment.

Despite its contribution to the Nigerian economy and gross domestic product (GDP), the government has yet to give proper attention to the sector.

The World Bank says the MSMEs play a significant role in most economies, particularly developing countries like Nigeria.

Better late than never as FG launches MSME, manufacturers’ loan fund

The delay in President Tinubu honouring his promise to manufacturers was of concern, and the process needed to be faster, said the Director General of MAN, Segun Ajayi-Kadir.

In a report by The ICIR in October 2023, Ajayi-Kadir noted that it would have been better if manufacturers and MSMEs had started to enjoy the loan facility.

The association was ready to provide details and the identities of its members to the government.

“It is better late than never; now the government should expedite action to ensure these facilities are available, particularly with the agreement with labour.”

He maintained that the N75 billion and N125 billion would not address the crises in the sectors but that a deliberate attempt at prioritising loan facilities at an interest rate repayable by manufacturers would have helped.

On April 22, the Nigerian government launched the MSME and manufacturing segment of the presidential N200 billion fund; however, access to the palliatives requires a bureaucratic process.

The Minister of Industry, Trade and Investment, Doris Uzoka-Anite, confirmed the launch, declaring that the Federal government had allocated N75 billion for MSMEs and N75 billion for manufacturers.

She detailed the application criteria and said MSMEs will receive up to N1 million, and manufacturers will receive up to N1 billion.

“This fund is strategically divided, dedicating N75 billion to MSMEs and another N75 billion to the manufacturing sector.”

Uzoka-Anite did not clarify whether the Federal government has slashed the N125 billion proposed for the MSMEs to N75 billion, as what was allocated falls short of the President’s announcement.

The  National President of AMEN, Saviour Iche, said the federal government is not prioritising the MSMEs and manufacturers over the palliative.

“The story is still the same. When you have done something once, twice or thrice, you will not be encouraged if asked to do it again.

“These people are playing to the gallery. We have suggested to the government ways to get the money to the right people,” he said.

He was concerned about why the government did not give the funds directly to associations rather than channel them through a third party, adding, “We have been applying online and are tired.”