President of the Manufacturers Association of Nigeria (MAN), Otunba Francis Meshioye, has called for specialised development banks created specifically to meet the needs of the real sector, saying the current commercial banks are not modelled to support manufacturers and small and medium-scale enterprises (SMEs).

Meshioye, who was a panellist at the Nigerian American Chamber of Commerce (NACC) October Breakfast meeting held in Lagos, said despite the demand, the country is yet to have a manufacturers’ bank.

“We have the Bank of Agriculture (BoA) because we understand the importance of that sector to the economy. The real sector is equally as important and deserves its specialised bank that understands and caters exclusively to the needs of manufacturers,” he said.

Speaking on the scarcity and high cost of funds, he regretted that the percentage of funds that go to the real sector yearly, compared to other sectors, is abysmal, currently at about 12.9 per cent.

“If we look at Africa, we are way behind. In Morocco, it is 59.8 per cent while it is 58.1 per cent in South Africa. In Egypt, it is 29, and in Algeria, it is at 19.5. And we wonder why the real sector does not contribute more to the country’s gross domestic product (GDP).

“Besides scarcity, the cost of funds is too high and no manufacturer can produce anything with the current interest rate. If the banks have access to short-term funds, they cannot give long-term loans. The cost of funds will determine how much the banks are going to give out as they certainly cannot give out funds at a loss to them,” he said.He called for a deliberate focus on policies to drive low-interest funding.

“The banks are growing their capital base and declaring huge profits while manufacturers are declaring losses and closing shops. When we even get the funds, by the time it is time to pay back, the cost of funds has gone up and we find out that our capital base has eroded even more.

“In the last two years, particularly last year, many operators in the private sector declared huge losses. Nine major companies declared N989 billion losses last year due to forex losses whereas eight banks declared an N878 billion forex profit.

“While we are making losses due to forex while the banks are making forex gains? The question we should be asking now is why are banks not using those gains to grow the private sector if they truly want to grow the real sector?” he asked.