For the countlessth time, the Manufacturers Association of Nigeria (MAN) has pleaded with the Federal Government to create a manufacturers’ bank that will cater to the specific requirements of regional producers.
Francis Meshioye, President of MAN, lamented the falling output levels, which have reduced the sector’s competitiveness and kept unemployment low, during his recent plea while delivering the Manufacturers CEOs Confidence Index 2024.
Meshioye said the manufacturing sector “is a peculiar sector which requires a specialised bank like we have for Bank of Agriculture and the Bank of Industry.”
Explaining that it was difficult for any manufacturing concern to break even with the current two digits interest rate, the MAN boss said the commercial banks preferred to give loan facilities to traders as opposed to manufacturers.
He said the commercial banks do not really understand what manufacturing entails, that is why they prefer to give loans to traders rather than to manufacturers.
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“They prefer to station their staff at the trader’s outlet where they would start recouping their money from daily sales.”
The MAN boss, however, advised that if the Federal Government cannot establish a bank for manufacturers, it could establish manufacturers desks in commercial banks with consultants to guide them on the peculiarities of the manufacturing sector and the interventions required to revive the sector in terms of funding.
“The consultants will also fashion out modalities for the recovery of the loan.”
In the same vein, the MAN’s Director of Research and Advocacy, Oluwasegun Osidipe, while analysing 2024 MCCI said manufacturers were forced to cut production and jobs in the first quarter of the year due to macroeconomic-related headwinds.
Despite slight optimism which saw MCCI points record a marginal increase above the 50 points confidence threshold, current business condition and current employment remained low, below 50 points.
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MAN associated this with the lingering effects of rising inflation, escalated energy prices, exchange rate instability and Customs duty rates.
According to the report, production and distribution costs surged further by 20 per cent in the first quarter of 2024 while “capacity utilisation declined further by 9.7 per cent.
“The volume of production slid further by 10.14 per cent in Q1 2024 from a contraction of 4.6 per cent recorded in the previous quarter.
“Manufacturing employment further declined by 5.27 per cent in Q1 from the 4.46 per cent contraction recorded in the preceding quarter.”
Sales volume also fell 7.16 per cent in the first quarter of the year, compared to the 1.6 per cent declined witnessed in the previous quarter.
On the report, Meshioye noted that forex, inflation and energy crises impacted negatively on the manufacturing sector. He decried the declined production levels, a development that led to decreased competitiveness of the sector, urging government to address the cost-push factors driving inflation and also fast-track the recapitalisation of the banks.
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“Undoubtedly, the manufacturing sector remains the most sustainable driver of steady economic growth, inflow of foreign exchange and enduring shared prosperity.
“MAN is therefore expectant that the government will intentionally prioritise the manufacturing sector by implementing the sector-specific recommendations contained in this report and providing the required policy support and incentives.
“This is the surest way of revamping the sector and repositioning the economy towards sustainable growth and development.”
Manufacturers have remained vocal about their inability to operate at optimum capacity due to various challenges confronting the economy.
In March, the association said 767 manufacturers shut down operations while 335 became distressed in 2023, leading to higher unemployment rate.
