- Manufacturers Receive N2 Trillion Loans in One Year
Deposit Money Banks granted manufacturers across the country a total of N2.01 trillion loans between July 2017 and June 2018, the banking sector credit report of the National Bureau of Statistics has shown.
The report published on Thursday, however, showed that the credit to the manufacturing sector declined by N239 billion from N2.26 trillion recorded in the previous year.
A further look into the report indicated that credit started declining in the third quarter of 2017, when the total credit granted to the manufacturing sector dropped from N2.26 trillion to N2.17 trillion in the fourth quarter of 2017. Suggesting that the surged in global crude oil price above the $70 a barrel by the end of the third quarter of 2017 boosted oil and gas sector attractiveness to DMBs at the expense of real sectors like manufacturing, services etc.
But between the fourth quarter of 2017 and the first quarter of 2018, the report showed credit declined further by another N100 billion from N2.17 trillion to N2.07 trillion.
However, the decline continued during the second quarter of 2018, dropping from N2.07 trillion to N2.01 trillion.
The drop in credit to the manufacturing sector is not in line with the Federal Government’s objective as stipulated in its Economic Recovery and Growth Plan.
According to the growth plan, the government would support and promote the sector through effective policies and ensure an average growth of 8.48 per cent between 2018 and 2020.
The sector is expected to expand from -5.8 percent in 2017 to about 10.6 percent by 2020.
Experts have blamed the lackluster growth of the sector on limited access to credit and financial services, poor infrastructure and unreliable power supply that forces businesses to spend more on operating cost, therefore, reducing their competitiveness and profitability.
The Regional Director, United Nations Industrial Development Organisation, Jean Bakole, called on the DMBs to provide credit support to entrepreneurs across the country.
“There is no doubt that Nigeria’s SME sector is the largest employer of labour in the country today. However, there is a major challenge that should be at the back of our minds. This relates to how to formalise and grow the large micro enterprises estimated to be over 37 million enterprises in 2013, according to SMEDAN/NBS survey of the Small and Medium Enterprises,” Bakole said.
“The financial institutions should think of ways to support these trained entrepreneurs to start up or expand their businesses, especially those who are able to develop a bankable business plan.”
“Particular attention should be paid to the issue of collateral for youth and women to enable them to access finance for start-ups or expansion of their businesses.”
