Two conditions that can save Nigeria from experiencing collapse of factories and having dried goods on the shelves are for the Federal Government to reduce interest rate and subsidise foreign exchange to the real sector, so say manufacturers.
They made the submission through Dr. Frank Jacobs, the president of their umbrella body, Manufacturers Association of Nigeria (MAN) who addressed media men, in Lagos on Friday.
In the past six months of economic recession in the country, there has been a steady rise in the interest rate, from 11 per cent to its current 16.5 per cent, while scarcity of the dollar has seen naira ditched to an all time low of N410 per dollar at the parallel market, with most factories reportedly downsizing to about 50 per cent full capacity.
The situation is not helped by a perceived inconsistency on the part of the government, which says it can only proffer solution to the economic recession if the National Assembly gives President Mohammadu Buhari emergency powers to tackle the bad situation.
Two immediate past chief executives of the Central Bank of Nigeria (CBN), Emir Lamido Sanusi and Professor Charles Soludo, have come down hard on the administration’s inability to present a blue print for the survival of the economy.
But after what it described as its last appeal, MAN rose from an emergency stakeholders’ meeting with a save our soul message to the government, insisting that both the interest rate and foreign currency procurement should be subsidised, failure of which little or no more production will be guaranteed by its members.
Jacobs, who told reporters that the situation had gone beyond the control of his members, requested for urgent move that will see CBN allocate more foreign exchange to the manufacturing sector and also review downwards the current interest rate.
“There is no hiding the fact that the operating interest rate is not investment-friendly and cannot support the economic diversification programme of the government, given Nigeria’s peculiar situation in the comity of nations“, he said.
According to MAN, contrary to government position, interest rate at five per cent is feasible, drawing inference from what is happening in Britain, following the BREXIT, which has seen it reflate its economy by cutting down its Monetary Policy Rate, making inflation rate in Britain today come down to seven per cent, while lending rate is one per cent.
Also calling for the revisit of the export stimulation fund (ESF), MAN President remarked that nine per cent interest rate on ESF is the highest among developing countries of the world and asked for a drastic reduction to see Nigeria compete favourably with others.
He also called for recapitalisation of the key development finance institutions in the country, particularly; Bank of Industry (BoI) and Bank of Agriculture (BoA) to enable them meet the funding needs of manufacturers and agro-based firms.
By Emma Eke….
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