Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has called for a coordinated financing framework that would enable manufacturers to get cheaper loans.
Oyedele said during the Ministerial Roundtable 2 of the Industrial Revolution Work Group (IRWG), the Federal Ministry of Industry, Trade and Investment (FMITI) in Lagos at the weekend that the high cost of loans to manufacturers is unsustainable.
The minister represented at the event by his Special Adviser on Finance and Investment, Marie Opere, stated that commercial banks’ credit to the manufacturing sector contracted by about N1.9 trillion last year, representing a decline of more than 22 per cent from N8.5 trillion to N6.61 trillion.
He said manufacturers were borrowing at prime rates averaging about 27 per cent, with maximum rates reaching the mid-30 per cent range. Oyedele described the financing scheme as unsuitable for investments requiring seven, 10 or 15 years to deliver returns.
He said the financing gap required government, regulators, development finance institutions and commercial capital providers to understand the constraints from one another’s perspective and develop a more coordinated financing framework.
