Mr Bimbo Ashiru, the Ogun State Commissioner for Commerce and Industry, says more than 100 manufacturers have benefited from N10 billion loan provided to manufacturers by the state government in the last six years.
He said the aim of the loan was to encourage the growth of the real sector in the state.
Ashiru disclosed this at the 10th Business Luncheon of Ogun Chapter of Manufacturers Association of Nigeria (MAN) on Friday in Ota.
The News Agency of Nigeria (NAN) reports that the theme of the meeting was:“Business Financing in Nigeria :The Bank of Industry Option”.
The commissioner, who was represented by Mrs Funmi Ajayi, the Special Adviser on Commerce and Industries to the Governor, said most beneficiaries of the fund had successfully repaid the loan.
He advised future beneficiaries to form the habit of repaying back, saying this would help in assisting other members of MAN that had not accessed the loan.
Ashiru expressed government’s commitment to providing enabling environment for manufacturers to produce at the optimal level and to better returns on their investments.
Earlier, Mr Wale Adegbite, the Chairman of the MAN in Ogun, urged commercial banks in the country to provide long term loans to manufacturers to help them expand the manufacturing sector.
Adegbite said that loans from commercial banks had not always been easy for manufacturers because banks preferred to lend short-term to businesses with high turnover rather than manufacturers whose investments were usually long-term.
The MAN boss said that the inability of commercial banks to grant long-term loans at a lower interest rates had hindered sustainable growth of the manufacturing sector which had also affected its contribution to nation’s Gross Domestic Product (GDP).
He said that getting loans from commercial banks for their operations had remained a tough task and even when they got the loans, the interest rates were always high.
“Obtaining loans from regular commercial banks in the country has not been easy for manufacturers as the banks prefer to lend short-term loans to businesses with high turnover and higher prospect of giving a quick return on their investments.”
Adegbite said this practice was detrimental to the growth of manufacturers whose investments were usually long-term and required continued control and supervision to bring forth returns.
“This is coupled with cumbersome administrative procedures and astronomically high interest rates and charges that have slowed down growth of the manufacturing industry.”he said.
He said that contribution of manufacturing to nominal GDP in the current quarter was 8.55 per cent lower than figures recorded in the corresponding period of 2016 at 8.60 per cent and for second quarter of 2017 at 9.02 per cent.
“These figures are ridiculously low when compared to the contribution of manufacturing to GDP in comparable countries like India, Indonesia, South Africa and Eqypt where the ratios are 17 per cent, 21 per cent, 13 per cent and 17per cent, respectively.
“All the above factors have undoubtedly put a strain on the ability of manufacturers to access loans from the banks and on the growth rate of many of such concerns”, he stressed.
“He commended the Federal Government for coming up with the N235 billion intervention fund via the Bank of Industry for refinancing and restructuring of bank’s loans to the manufacturing sector.
He said this would fast track the development of the manufacturing sector of the Nigerian economy by improving access to credit by manufacturers, among others.