Manufacturers Association of Nigeria (MAN) has warned that high interest rates and rising energy costs are putting severe pressure on the country’s manufacturing sector.
The association lamented that manufacturers were struggling to remain in business amid electricity costs and lending rates ranging between 32 and 36 per cent.
MAN President, Ifeanyi Okoye, raised the concern on Wednesday in Port Harcourt, Rivers State, during the 42nd Annual General Meeting, Conference and Exhibition of the Rivers/Bayelsa Branch.
Speaking on the theme, ‘Manufacturing for National Development: Integrating Education, Skills, Investment and Tax Incentive’, Okoye described education as the foundation of industrial growth and skills development as the link between learning and productivity.
He said investment remained the driving force of manufacturing but could not thrive in an environment characterised by unreliable and expensive energy supply.
“With electricity at N285, maybe up to N230 per kilowatt-hour, diesel at about N2,000 per litre, and lending at about 32 to 36 per cent, no manufacturer can, of course, exist,” he said.
The MAN president recalled his participation at a Nigerian Economic Summit Group meeting in Abuja and another engagement in Paris, where the Managing Director of the Bank of Industry reportedly said interest rates for manufacturers had been declining for about a year.
Okoye said he challenged the assertion, insisting that borrowing costs had continued to rise despite the recapitalisation of banks.
“I was shocked. I stood up as a discussant and told him, I cannot agree with you. For the past one year, interest rates have been going up irrespective of bank recapitalisation,” he stated.
He also criticised what he described as unequal access to affordable financing between Nigerian manufacturers and foreign investors.
According to him, Chinese investors can obtain loans at interest rates as low as three per cent, while Nigerian manufacturers access funding from the Bank of Industry at about nine per cent, largely for machinery purchases and subject to strict monitoring.
“Give me three per cent interest. Forget the type of industry I will build. Can any bank in Nigeria give you 10 per cent interest?” he queried.
On taxation, Okoye called for incentives that would reward businesses creating employment, generating exports and utilising locally sourced raw materials.
He commended Rivers State Governor, Siminalayi Fubara, for measures aimed at improving the business environment, including the establishment of an Investment Promotion Agency and efforts to reduce harassment of businesses in Trans Amadi and Eleme.
He also praised the governor for maintaining peace and ensuring that industrial locations such as Trans-Amadi and Onne remained operational.
Similarly, the MAN president acknowledged Bayelsa State Governor, Douye Diri, for adopting an open-door approach through the Ministry of Trade, Industry and Investment and addressing electricity challenges, including the installation of a 600-megawatt gas-powered generator in Yenagoa.
However, Okoye expressed disappointment over the absence of commissioners from both Rivers and Bayelsa states at the meeting.
Earlier, he commended the outgoing leadership of the Rivers/Bayelsa Branch for improving the organisation’s institutional image and acquiring a bus.
He urged the incoming chairman, Nosakhare Agana, to sustain the achievements of his predecessor, Vincent Okuku, and take the branch to a higher level.
In his remarks, Okuku appealed to the governments of Rivers and Bayelsa states to maintain regular engagement with MAN to address the challenges confronting manufacturers in the region.
[THE GUARDIAN]
