32% interest rate, energy costs threaten factories — MAN

The Manufacturers Association of Nigeria (MAN) has warned that high lending rates and energy costs are undermining industrial production, saying manufacturers face mounting difficulties sustaining operations under current economic conditions.

The association said borrowing costs of between 32 and 36 per cent, coupled with expensive electricity and diesel, had made manufacturing increasingly unviable.

MAN President, Ifeanyi Okoye, raised the concerns on Wednesday in Port Harcourt, Rivers State, at the 42nd Annual General Meeting, Conference and Exhibition of the association’s Rivers and Bayelsa branch.

Speaking on the theme, “Manufacturing for National Development: Integrating Education, Skills, Investment, and Tax Incentives”, Okoye said education, skills and investment were essential to industrial growth, but warned that investment could not thrive without reliable and affordable energy.

“With PHCN at N285, maybe up to N230 per kilowatt-hour, diesel at about N2,000 per litre, and lending at about 32 to 36 per cent, no manufacturer can of course exist,” he said.

The MAN president also challenged claims that interest rates for manufacturers had declined over the past year, recounting his disagreement with the Managing Director of the Bank of Industry at a Nigerian Economic Summit Group meeting in Abuja and another engagement in Paris.

“I was shocked. I stood up as a discussant and told him, I cannot agree with you. For the past one year, interest rates have been going up irrespective of bank recapitalisation,” Okoye said.

He expressed concern over the disparity between financing available to Nigerian manufacturers and foreign investors, noting that Chinese investors could access loans at interest rates as low as three per cent.

He said the Bank of Industry offered Nigerian manufacturers loans at nine per cent for machinery purchases, subject to strict monitoring.

“Give me 3 per cent interest. Forget the type of industry I will build. Can any bank in Nigeria give you 10 per cent interest?” he queried.

On tax incentives, Okoye said the system should reward businesses that create jobs, export goods and utilise locally sourced raw materials.

He identified high energy costs, unreliable electricity, poor transport infrastructure, inconsistent regulations, multiple taxation and overlapping regulatory responsibilities as major challenges confronting manufacturers in Rivers and Bayelsa states.

According to him, energy expenses consume between 38 and 42 per cent of manufacturers’ earnings, while host communities in Eleme, Emohua, Ahoada and Southern Ijaw have subjected businesses to arbitrary demands and disruptions.

The association also highlighted difficulties in accessing long-term financing, disclosing that it was engaging the Federal Government on the establishment of a dedicated fund for manufacturers.

Okoye called for the accelerated provision of electricity to industrial clusters through dedicated gas-to-industry power projects.

He also advocated a consolidated tax system through joint harmonisation committees to eliminate the harassment of trucks by multiple tax authorities.

The MAN president urged the governments of Rivers and Bayelsa to prioritise the rehabilitation of access roads to Trans Amadi, Eleme, Ogbia, Yenagoa and Gbarantoru through public-private partnerships.

Other recommendations included establishing a one-stop shop for land documentation, quarterly government-manufacturer dialogue, and the inclusion of MAN members on the boards of relevant ministries, departments and agencies.

He also called for a structured framework for corporate-community engagement, development of marine-based industries along the Brass corridor under the blue economy initiative, and enforcement of the patronage of Made-in-Nigeria products by government agencies.

Okoye commended Rivers State Governor, Siminalayi Fubara, for improving the business environment through the establishment of an investment promotion agency and reducing harassment of businesses in Trans Amadi and Eleme.

He also praised the governor for maintaining peace and keeping the Trans Amadi and Onne industrial areas operational.

The MAN president commended Bayelsa State Governor, Douye Diri, for his open-door policy through the Ministry of Trade, Industry and Investment and efforts to address power challenges, including the installation of a 600-megawatt gas generator in Yenagoa.

However, he expressed disappointment over the absence of commissioners from both states at the AGM.

“I'm not very comfortable that not even a commissioner is here from Rivers State, not even a commissioner from Bayelsa State,” he said.

Okoye said the association would engage the two governors after the electioneering period to discuss the challenges confronting manufacturers.

He also commended the outgoing leadership of the Rivers and Bayelsa branch for improving the association’s institutional image and acquiring a bus.

He charged the incoming chairman, Nosakhare Agana, to sustain the achievements of his predecessor, Elder Vincent Okuku, and surpass them.

Earlier, Okuku urged the governments of Rivers and Bayelsa to sustain dialogue with MAN and other organised business groups to address the difficulties facing manufacturers.

“Despite our progress, manufacturers continue to face serious challenges, including high energy costs, unreliable electricity, poor infrastructure, flooding, logistics difficulties, multiple taxes and levies, regulatory uncertainty, limited access to finance and shortages of relevant technical skills,” he said.

He added that the challenges affected production costs, employment, investment and the competitiveness of local businesses.

“We, therefore, urge the governments of Rivers and Bayelsa States to sustain dialogue with MAN and other organised business groups and turn discussions into practical solutions,” Okuku said.