With the continued spike in inflation, unemployment rate, energy cost, forex scarcity and others hitting manufacturing sector’s bottom lines, MAN and others say this is the time to release the N75 billion Micro, Small and Medium Enterprises Survival Fund and Guaranteed Off-take schemes out of the N2.3 trillion stimulus package in the Nigeria Economic Sustainability Plan for business owners. TAIWO HASSAN reports
The Nigerian manufacturing sector is at cross roads following the negative impacts of COVID-19 and associated containment measures putting a sizeable number of Small and Medium scale Enterprises (SMEs) and manufacturing firms into dire financial straits. In fact, the impending manufacturing challenges have also contributed to growing SMEs’ mortalities.
Last week’s release by the National Bureau of Statistics (NBS) of report on the country’s consumer price index (CPI), which measures inflation, showed that it increased by 13.71 per cent (year-on-year) in September 2020. The shows that the real sector of the economy is in a mess with monumental consequences post-COVID-19.
This implies that there is an urgent need for financial support in terms of bailout or intervention funds to rescue the sector from further collapsing. While reacting to the NBS’ report on the country’s inflation rate, members of the organised private sector (OPS) lamented that the rising inflation rate was going to worsen SME businesses, manufacturing and further fragility in the country’s economy post-COVID-19.
The Acting Director-General, Manufacturers Association of Nigeria, Ambrose Oruche, and the Director-General, Lagos Chamber of Commerce and Industry, Dr. Muda Yusuf, in separate interviews with New Telegraph, affirmed that the rising inflation trajectory would have serious implications for businesses regarding production cost, investment real return rate, and overall economic performance in the country. They explained that the NBS’ new report would have adverse effects on local manufacturers.
According to them, the inflation rate in the country is expected to disrupt real sector of the economy’s projection and this will definitely have consequences on local manufacturing firms’ bottom lines, which is a concern for MAN and others at this period. The two DGs explained that the OPS expected the inflation rate to sustain its upward trajectory for the rest of the year.
Similarly, the National Bureau of Statistics also reported that the total number of unemployed Nigerians was 21,764,617.
With this report, MAN is warning that Nigeria’s economy is sitting on keg of gun powder if government does not urgently declare financial support for the country’s real sector of the economy. MAN’s assertion is based on the fact that among the 21.7 million unemployed Nigerians in the NBS report, most of them are those working in the real sector of the economy, which has been battered by the emergence of COVID-19.
Oruche, in an interview with this newspaper in Lagos, stated that there would be further increases in unemployment rate in the country by year end if government continues to neglect stimulus packages, infrastructure, energy supply, enabling environment, provision of access to local raw materials among others in the real sector of the economy.
Oruche emphatically stated that the real sector was the main driver of Nigeria’s economy, accounting for 80 per cent of the country’s gross domestic product (GDP).
He blamed the Federal Govern- ment for putting the country’s unemployment rate into the current dire situation by not supporting the real sector of the economy enough with stimulus packages at the height of the pandemic.
Speaking on the stimulus packages introduced by government, the Acting MAN president pointed out that there was no stimulus packages from government for the real sector of the economy, rather it was intervention funds that was introduced with five per cent interest rate per annum (all inclusive) up to February 28, 2021 and thereafter, the interest on the facility being revert to nine per cent p.a. (all inclusive) as from 1st March 2021.
He explained that the term of the loan had a maximum tenor of not more than three years with, at least, one-year moratorium, fuming that manufacturing firms used the whole of the one year moratorium to wait for loan due to long processes in filling, submitting and approving the forms.
Need for financial support
Following the beginning of the registration portal for the N75 billion Micro, Small and Medium Enterprises Survival Fund and Guaranteed Off-take schemes of the Federal Government since September 21, MAN and others in the private sector believe that government should fast track the release of the funds to SMEs and manufacturers to turn around their businesses.
In his reaction, the Acting MAN DG said firms were facing daily difficult challenges. He said: “The challenges we are having now is that government at all levels, even federal, is yet to support manufacturers with funds, because most of the agencies working on these stimulus packages are frustrating manufacturers from accessing the loans easily and the chunk of employed workers are manufacturing firms.
“There is need for governments at all levels to create enabling environment for business to thrive in this country because the major chunk of employment comes from the real sector. But the real sector operators are suffering in this country.”
N75bn MSMEs survival funds
Speaking at the commencent of the registration portal for the N75 billion Micro, Small and Medium Enterprises Survival Fund and Guaranteed Off-take schemes of the Federal Government, the Minister of State for Industry, Trade and Investment, Mariam Katagum, announced that the project would run for an initial period of three months, would be opened for 1.7 million entities and individuals across the country.
The minister, who disclosed this in a statement issued in Abuja by the Assistant Director, Information, Federal Ministry of Industry, Trade and Investment, Oluwakemi Ogunmakinwa, explained that the survival fund and guaranteed offtake schemes were at the core of the N2.3 trillion stimulus package of the Federal Government.
The stimulus package, also known as the Nigeria Economic Sustainability Plan, is being implemented by the Federal Government to cushion the impact of COVID-19 on the country’s economy.
He said the implementation of the plan was with a view to boosting the economy by saving existing jobs and creating new job opportunities. Katagum, who chairs the steering committee for the effective implementation of the projects, said the initiatives came at a time when financial support was critical for MSMEs.
Without wasting time, it is now paramount for government to urgently release the N75bn stimulus package by making the conditions flexible for loan seekers.