Government Urged To Collaborate With CBN In Crafting Credit Framework For Manufacturing Growth

Government Urged To Collaborate With CBN In Crafting Credit Framework For Manufacturing Growth

In a bid to expedite the realization of the Federal Government’s $1 trillion economy plan, the Manufacturers Association of Nigeria (MAN) is urging the Central Bank of Nigeria (CBN) to establish a sustainable framework for directing credit interventions into the manufacturing sector, beyond direct intervention. MAN emphasizes the necessity for the CBN to collaborate with commercial banks to deliberately offer long-term, single-digit interest loans to the manufacturing sector……..CONTINUE READING

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Outlined in its “Manufacturing sector outlook for 2024,” signed by Segun Ajayi-Kadir, the Director-General, and shared with Sunday Vanguard, MAN recommends that the CBN enhance its partnership with the fiscal authority, specifically the Federal Ministry of Finance and the Tariff Technical Committee (TTC). This collaboration aims to align policies properly, focusing on appropriate HS Codes for items in which Nigeria possesses sufficient capacity to discourage imports and conserve scarce foreign exchange.

Ajayi-Kadir suggests maintaining reasonable stability in monetary policy and underscores the importance of the CBN reverting to its conventional roles. Additionally, he stresses the need for deliberate improvement in forex supply to the productive sector for importing inputs not available locally.

Expressing hope that the government will recognize the manufacturing sector as a key driver of sustained economic growth, Ajayi-Kadir anticipates a sectoral real growth of approximately 3.2 percent in 2024. He expects the sector’s contribution to the economy to exceed 10 percent, with the Manufacturers’ CEOs Confidence Index projected to rise above 55 points by the end of Q4 2023.

Despite challenges such as forex-related issues and high inflation rates impacting manufacturing performance, Ajayi-Kadir foresees a modest improvement in manufacturing output in the third quarter as these challenges subside. He also notes that ongoing concessions of seaports, airports, and roads could benefit the cement sub-sector and contribute to infrastructure upgrades for enhanced manufacturing productivity.

In addressing challenges like multiple taxation and poor access to credit, Ajayi-Kadir points to ongoing tax reforms and the envisaged bank recapitalization. He believes these initiatives, if successfully implemented, will positively impact the manufacturing sector.

Turning attention to the electricity sector, MAN expects dynamic implementation of the Electricity Act 2023 to stimulate private investment in renewable energy, enhance energy efficiency, and improve electricity supply to the manufacturing sector. Improved electricity supply is seen as a solution to inadequacy issues, reducing disruptions caused by frequent outages and enhancing energy security.

To further enhance the sector, MAN recommends redirecting cost savings from fuel subsidies toward production-focused policies, supported by structural measures. The overhaul of the power sector and incentivizing investment in renewables are also suggested to boost electricity generation and promote energy-cost efficiency.

In conclusion, Ajayi-Kadir emphasizes the government’s role in setting an example by prioritizing the patronage of made-in-Nigeria products in all its purchases, contracts, and projects. He calls for the enforcement of Executive Order 003 across all three tiers of government to increase support for locally-made products and encourages local sourcing of raw materials through comprehensive incentives to address productivity challenges and imported inflation.

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