Manufacturers yet to access CBN’s ₦1trn intervention loan

‘Why forex market is under immense pressure’

In March this year, the Central Bank of Nigeria (CBN) announced plans to boost local manufacturing and import substitution by injecting ₦1 trillion intervention in critical sectors of the economy. But four months after the announcement, manufacturers have said they are yet to get the funds to speed up business activities amid economic uncertainty.

In a statement recently, the CBN governor, Godwin Emefiele, explained that an additional ₦100 billion would be used to support the health sector to ensure that laboratories, researchers and innovators work with global scientists to produce vaccines and test kits in Nigeria.

In an interview with Daily Times, the president of Manufacturers Association of Nigeria, (MAN), Engr. Mansur Ahmed, said that none of its members had received any funding from the apex bank.

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He remarked: “On the ₦1 trillion intervention loan fund for manufacturing sector, the feedback from commercial banks is that the CBN is yet to provide the framework to start accepting applications, which has contributed to a clog in the wheel of progress.

“Notwithstanding, the association is not resting on its oars as relevant government agencies have been engaged to discuss the way forward on implementation.”

Meanwhile, in a move to speed up responses to tackling the pandemic, the apex bank released guidelines for accessing the Healthcare Sector Research and Development Intervention Scheme grant, keeping manufacturers gawked as to when their sector will get a guideline.

Speaking with Daily Times, the General Secretary of Pulp Paper and Paper Products Printing and Publishing Senior Staff Association of Nigeria (PPAPPPAPSSAN), Benedict Ikegbulam, said it was unfortunate that the intervention loan by the CBN cannot be accessed by manufacturers four months after pronouncement.

He reiterated the implications of the delay on the country’s Purchasing Managers Index which has been on the decline, below the 50 index point which signifies a contraction or an expansion.

“Though one cannot be surprised given the general attitude of Government on all issues in Nigeria. The implication of the delay cannot be over-emphasised.

“Manufacturing is a critical sector in the Nigerian economy. Any adverse effect on it spells doom to the entire wellbeing of the nation. The manufacturers must exist before you talk about workers and, where they cannot meet their needs to operate, will lead to loss of jobs which this country cannot afford now.

“The danger associated with the delay is enormous. The Government should as a matter of urgency allow them to access the funds in order to save the nation especially at this time of COVID-19 pandemic. Everything must be done at this point in time to save the already fragile economy of this nation,” he maintained.

The Manufacturing PMI contracted further for the third consecutive month by 44.9 index point in July 2020 from 41.1 points in June. CBN released the PMI which showed that in July 2020, supplier delivery time was faster, while production level, new orders, employment level and raw materials inventories contracted.

The report shows that out of the 14 surveyed subsectors, transportation equipment subsector reported growth (above 50% threshold) in the review month while non-metallic mineral products sector reported no change. However, the remaining 12 subsectors reported contraction in the review period. These include printing and related support activities; primary metals; fabricated metal products; paper products; food, beverage and tobacco products; chemical and pharmaceutical products; furniture and related products; electrical equipment; plastics and rubber products; petroleum and coal products; textile, apparel, leather and footwear and cement.

However, Ahmed said the manufacturing activity isn’t picking up because of the paucity of funds. “The PMI shows that the economy did not do well, which is also in line with our Manufacturers CEOs confidence Index conducted by the association which shows a decline.

“Also, you will recall that the ease in lockdown started in May which did not see many manufacturers take off, notwithstanding the impact the lockdown has had.

“I do not expect much difference in this improvement even till August as the recovery process would be gradual.

“In policy making, there is usually an implementation lag so we may not be expecting an automatic improvement.

”He further explained that, if the Central Bank can readily make available foreign exchange for the manufacturing sector for use in the importation of raw materials and for machineries, this could bring about a spike in the PMI.

“Another change we envisage in making this a reality is the low inflow of forex because of drop in crude oil price,” he added.

By Joy Obakeye, Lagos

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Olamide Francis

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