Ever since Nigeria became independent, achieving economic development through rapid industrialization has been elusive, and this has been the primary goal of the various administrations in the country.
Manufacturing has generally been described and accepted as a catalyst for economic growth and development all over the world. Industrialization is widely seen as an essential tool for accelerating economic growth and development.
However, the unfavorable macroeconomic environment in Nigeria has constrained the performance of the manufacturing sector. In particular, with the triadic rates: high and rising inflation rate, double-digit lending rate and unfavorable exchange rate. The regulatory environment is severe and induces high operating costs in the economy. There is also an infrastructure deficit that businesses face.
Due to the high cost business environment, the manufacturing sector has consistently suffered from low cost competitiveness as a plethora of close substitutes for Nigerian manufactured goods are officially imported into the country while others are brought into the country. smuggling across land borders.
In order to appease the high cost manufacturing environment and improve the competitiveness of Nigerian manufactured goods, financing at a liberal (single digit) lending rate has become essential. This explains why the Central Bank of Nigeria (CBN) has created several development finance windows with “single digit” interest rates to support genuine productive enterprises, including manufacturing.
Over the years, the apex bank has been able to carry out several intervention programs to revive the country’s economy. There were interventions in agriculture, energy, manufacturing and SMEs.
Some of the interventions for access to finance are; Presidential Fertilizer Initiative (PFI); CBN-BOI Industrial Facility (CBIF); Textile Sector Intervention Facility (TSIF); Real Sector Support Facility (RSSF); RSSF using Differentiated Cash Reserve Ratio (RSSF-DCRR); Micro, Small and Medium Enterprise Development Fund (MSMEDF); Agribusiness/Small and Medium Enterprises Investment Program (AGSMEIS); Youth Empowerment Development Program (YEDP); Non-Oil Export Stimulation Facility (NESF); Export Development Facility (EDF); Small and Medium Enterprise Credit Guarantee Scheme (SMECGS); N1.1 trillion response fund; among others.
In the CBN’s statement of the Monetary Policy Committee (MPC) meeting held on March 21, 2022, the Committee noted that although the Manufacturing Purchasing Managers’ Index (PMI) remained above the benchmark from 50 index points in February 2022, it moderated slightly to 50.1 index points from 51.4 index points in January 2022. This sustained positive performance of the manufacturing PMI reflects the resilience of the economy in the face of the persistent headwinds to the recovery.
Furthermore, in the statement, between January and February 2022, the apex bank disbursed the sum of N428.31 billion under the N1 trillion Real Sector Facility to 37 additional projects in the sectors manufacturing, agriculture and services. Cumulative disbursements under the Real Sector Facility currently stand at N1.75 trillion, disbursed for 368 projects across the country. Under the 100% Production and Productivity (PPP) policy, the Bank disbursed N29.51 billion for 31 projects, including 16 in manufacturing, 13 in agriculture and two in health care.
As part of its efforts to support health sector resilience, the Bank has also disbursed N8.50 billion for 6 health care projects under the Health Sector Intervention Facility (HSIF ), bringing cumulative disbursements to N116.72 billion for 124 projects, comprising of 31 pharmaceuticals, 56 hospitals and 37 other services. A further tranche of N14.7 million was disbursed to five researchers under the Health Sector Research and Development (HSRD) grant.
The CBN said its intervention programs have helped boost growth and boost GDP. CBN Governor Godwin Emefiele said the central bank, as a development finance institution, has a responsibility to support the economy, especially in difficult times.
“We reiterate that the CBN remains a central bank focused on development finance and that it is normal for a developing economy to deploy the tools of development finance through interventions to support the growth of the economy,” Emefiele explained.
Further, speaking on several CBN interventions made available to critical sectors of the economy, particularly the manufacturing sector at the Chartered Institute of Bankers of Nigeria (CIBN) Annual Dinner in 2021, the Governor of the CBN said Apex Bank had created 1 trillion naira. loan facility to boost local manufacturing and production in critical sectors; including 53 major industrial projects.
“Other CBN interventions in the manufacturing sector included a N100 billion intervention fund (which was later increased to N200 billion) for pharmaceutical manufacturing companies and healthcare professionals to expand and build the capacity of health facilities.
“Interventions also included the N50 billion stimulus fund for the textile industry and the N10 billion intervention fund to the Kano state government to revive industries in the state,” a- he declared.
According to Emefiele, our interventions, particularly in the manufacturing and agricultural sectors, have contributed significantly to encouraging continued improvements in growth in these two key sectors of our economy. Today, we also saw increased efforts by our local manufacturing companies to engage in backward integration efforts. Secondly, a visit to any large retail chain will reveal an increasing number of high quality products made in Nigeria compared to imported products, which helps to increase domestic production, create jobs and wealth in our country. If these intervention efforts had not been led by the monetary and fiscal authorities, our economy would have been in a sorry state.
“We must take deliberate steps to diversify the base of the Nigerian economy. As a true African giant, we must roll up our sleeves and do all we can to stop the incidence of importing anything and everything. Proactive measures by private sector stakeholders in collaboration with government to support the growth of sectors such as manufacturing, ICT and infrastructure will strengthen our ability to face the challenges of COVID-19 and stimulate the growth of our economy.
Furthermore, operators in the Nigerian manufacturing sector commended the interventions of the Central Bank of Nigeria (CBN) in the real sector and pushed for better access to infrastructure and foreign exchange to make the interventions more effective.
The Chairman of the Pharmaceutical Manufacturers Association of Nigeria, Mr. Fidelis Ayebae, recently noted that the intervention has come with a soothing balm as there is no way we are going to be profitable by borrowing between 25 and 30 % with commercial banks. .
He said: “The window that CBN has given is nine months for people to access this fund. I accessed it as managing director and promoter of Fidson Healthcare Plc and I’m sure over time everyone who applied will have access to it as the fund is real and CBN is indeed keen to help Nigerian industry to contribute their quota to nation building.
During the commissioning ceremony of the 3M/MT cement plant by the BUA Group in Sokoto, the chairman of BUA Cement Plc, Alhaji Abdul Samad Rabiu, said: “The support of the Central Bank of Nigeria in the establishment of this gigantic project also deserves to be mentioned. .
“So far, we have invested over $1 billion over the past four years and we urge CBN to continue supporting industries like ours that use locally sourced raw materials to add value. because, as mentioned earlier, these industries could save the country billions of dollars a year and also ensure that the products are readily available across the country.
Meanwhile, stakeholders said, “Without a doubt, development funds are key to boosting investment in manufacturing and, by extension, production. This is because the development fund’s single-digit interest rate stands in stark contrast to the more than 25% rate applied to commercial bank loans. The different funding windows of the CBN are commendable but the poor implementation hinders the achievement of the noble goals of these funds.