Manufacturers seek clarifications on proposed intervention funds

Operators want funds at five per cent interest rate

The Organised Private Sector (OPS) has urged the Federal Government to provide details on its intervention funds for the manufacturing and other real sector investments.The group listed critical areas that need intervention to include, capacity, financing, infrastructure, smuggling, dumping of sub-standard goods in the country and patronage of locally manufactured goods.

While Central Bank of Nigeria (CBN) had offered its funds to the real sector at nine per cent under previous intervention schemes, manufacturers are seeking an interest rate regime of five per to operate effectively in the prevailing environment.

In a chat with The Guardian, President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, stated that the Federal Government was yet to unveil the details of the intervention schemes.Jacobs maintained that reflating the economy would be achievable if government created special interest rate regime for manufacturers at a single digit rate of not more than five per cent.

He also stressed the need for government to review the current interest rate downward. The prevailing interest rate, he said, is not investment-friendly to support the economic diversification programme of the administration.

According to Jacobs, the sector is better placed to engender the desired positive changes that would bring massive employment, export earnings and tax revenue for the country.

Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf, added that government must reduce the risk profile of the real sector to avoid loan defaults, especially as it seeks to reduce non-performing loans.

Yusuf said: “Most of the intervention funds are exiting funds. Some banks have problems lending it out, as they have to pledge their securities to back up the loans. They are scared and this has slowed down the rate of disbursements to the real sector. Existing funds have been used to re-finance and restructure loans but government needs to check how those loans are being restructured.”

General Manager, SME, Fidelity Bank Plc, Ken Opara, however, stated that the bank has been able to disburse N2 billion from the apex bank’s intervention funds.Opara explained that the bank decided to deploy a strategy that focuses on capacity building and cluster development to drive deployment of funds to real sector.

A source at one of the development finance institutions told The Guardian that the N235 billion CBN intervention fund for re-financing and restructuring of facilities in the manufacturing sector had been exhausted as many manufacturers deployed it as lifelines to remain in operation. He revealed that the bank is awaiting new directives and modalities from the apex bank on the special intervention funds.