IN view of lingering complaints of continued denial of access to the Central Bank of Nigeria’s (CBN) intervention funds, the Organised Private Sector has implored the apex bank to specifically direct a particular real sector intervention fund to its eligible and verifiable members.
This, the sector players believe, will ensure that such funds get to those it was meant for, especially in the manufacturing sector.
This was disclosed at the 1st National Stakeholders Conference on Synergy between the Nigerian Banking Industry and the Organised Private Sector (OPS) put together by the Association of Corporate Affairs Managers of Banks (ACAMB) in conjunction with the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos recently.
During the panel discussion, which involved representatives of the various bodies and members of the banking community, the OPS agreed that the Nigerian private sector, composed largely of micro, small and medium sized businesses, lacks the basic requirements (collateral, basic business financial plan and other documentation) to access commercial banks loans.
It added that their credit history is doubtful and most times the business is highly volatile due to unconducive business environment in the country. The stated composition of the sector contributes to the reluctance of the banking industry to avail funds to the private sector especially the manufacturing inclined.
In addition, the above status, according to them, hinders the private sector from accessing long term loans which are mostly preferred for business investment due to the ability to secure huge funds needed for the project and the long payback period that will give opportunity to pay from the investment yields.
The OPS also said the cost of funding is an essential tool for borrowing, stressing that provision of funds at double digit lending rate being experienced in Nigeria is a barrier to investment and competitiveness of the private sector.
This therefore discourages investment and impedes the expansion of existing investment.
The OPS further observed that performance and development of the banking and industrial sectors was expedient for the sustainability of the economy, hence, it was of necessity that both sectors worked together to reduce poverty, attract investment, and boost the growth of the economy.
There are areas of collaborations between the banking industry and private sector to increase the relationship, thereby aiding the delivery of the sectors. The involvement of the government through the CBN is also essential to formulate policies and ensure compliance of the stakeholders.
According to them, it was necessary for the banking industry to consider and formulate a mechanism to accommodate the private sector’s request for long term loans, especially the SMEs, as this would reduce the financial barrier of the sector and attract more investors into the country.
Double digit interest rate increases the cost of funding, hence, it is not business friendly.
The OPS also recommended that provision of a revitalisation fund for the private sector at single digit interest rate in conjunction with CBN and government would encourage and boost performance of the investors.
It is also expedient that proper monitoring mechanisms be developed to ensure strict disbursement to the approved sector, they said.
As earlier stated, the traditional industry-bank lending relationship is no longer supporting the growth of the industry, the bank and the economy as a whole.
Industry activities have massively declined, showing a rising number of moribund industries within the industrial areas across the country and the increasing capital flight that besets the country, the OPS stated.
The Organised Private Sector of Nigeria is a body that brings together key business management organisations such as Manufacturers Association of Nigeria (MAN), Nigeria Employers’ Consultative Association (NECA), Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), NASME, and NASSI to speak for the continuous improvement of the business operating environment in the country.
Among participants at the conference were the Deputy Director, Financial System Stability Directorate, CBN, Mr Eboagwu Ezulu; Chairperson Agriculture and Agro-Allied Group, LCCI, Mrs Edobong Akpabio; CIBN President, Dr Ken Okpara; ACAMB President, MrRasheed Bolarinwa and NACCIMA representative, Mr Ayo Osunloye.
ALSO READ FROM NIGERIAN TRIBUNE
- ASUU Extends Strike By 4 Weeks
- Forex Crisis: Fresh Facts Reveal NNPC’s $2.7bn Remittance To Its CBN Accounts In 6 Months
and then