… As CBN advices on access to cheap financing
Nigerian manufacturers incurred approximately N1.3 trillion in financing costs and N1.2 trillion in energy expenses in 2024, according to Francis Meshioye, President of the Manufacturers Association of Nigeria(MAN).
These expenditures represented roughly 30-35 percent and 30-40 percent of their total costs, respectively.
Meshioye said this at the Bankers Committee town hall meeting themed ‘Enhancing the Competitiveness of Nigerian Products’ in Lagos on Monday, April 14.
Read also: Inflation-infused input cost surge pressures manufacturers
He said that financing and energy are very important for Nigerian exporters to become competitive.
“ We need to do much more locally to make our goods competitive. But the key point is that some things have to be put in place. Bankers have to rethink what they need to do to assist in ensuring that business competitiveness is sustained.
“ For instance, to be competitive, Nigerian exporters have to think of what kind of quality do we have to do, what type of packaging do we have to do, what type of innovation we have to bring, even the training and skilling of the business people to ensure that they can work competitively. But the important thing in this too is the financing because almost everyone who has spoken has spoken about the high cost of fund,” Meshioye said.
The amount spent on loan repayments during this period is reflective of the high-interest-rate operating environment, with the country’s benchmark rate at a whopping 26.75 percent. This has put interest rates of commercial banks at around 30 percent or more, making it expensive for businesses to access funds.
Nelson Amuwa, deputy director of the Consumer and Financial Protection Department of the CBN, said that manufacturers could look to other sources for cheaper funds.
Read also: How Nigerian manufacturers can tackle rising input costs
“ For manufacturers, there are other ways they can go to get money. For example, we have the BOI, and we also have the Development Finance Institutions. Those people give interest rates below what the commercial banks are giving. So I encourage such companies to go to one of them,” he said.
Bamidele Ayemibo, lead consultant, 3T Impex Consulting and keynote speaker at the event, said that it is important for Nigeria to be competitive in its exports as manufacturing is one of the biggest exports globally.
According to his analysis, the government has direct leverage to increase foreign exchange inflows solely through trade in goods and services, a contrast to Foreign Portfolio Investment, Foreign Direct Investment, and Remittances, which are less directly controlled.
