Explore alternative financing, Ogun MAN urges manufacturers

The Chairman of the Manufacturers Association of Nigeria (MAN), Ogun State Branch, George Onafowokan, has called on manufacturers across Nigeria to adopt alternative financing models such as leasing and equity markets to navigate the current economic challenges and stimulate industrial growth.

Onafowokan made this appeal during the 40th Annual General Meeting (AGM) of the Ogun State MAN branch, held on Thursday in Abeokuta. Themed “Financing Manufacturing Concerns: Exploring Alternatives,” the event highlighted the urgent need for Nigerian manufacturers to look beyond conventional bank loans, which have become increasingly unsustainable due to escalating interest rates and inflation.

“With the last official Monetary Policy Rate (MPR) at 27.5% as of May—excluding bank charges and processing fees—repaying commercial bank loans has become burdensome,” Onafowokan explained. “This rate ultimately erodes the profit on goods produced with the loan amount.”

He recommended financing options such as leasing, equity financing, green bonds, and support from development finance institutions like the Bank of Industry (BOI), African Development Bank (AfDB), and African Export-Import Bank (Afreximbank) as viable alternatives for manufacturers seeking more affordable credit.

“Factory expansion plans often require asset procurement. Given the high cost of forex, interest rates, and other economic pressures, leasing equipment—with an option to own—is a strategy worth exploring,” he noted.

Onafowokan also drew attention to the formidable challenges manufacturers have faced in recent years, including rising energy costs, forex volatility, high inflation, and weakened consumer purchasing power.

“By 2024, foreign exchange rates surged to as high as ₦1,605/$1, up from ₦635/$1 in December 2023 and ₦447/$1 in December 2022. Production costs skyrocketed, while warehouses filled up with unsold goods due to declining consumer demand,” he said.

Despite these challenges, he applauded Ogun State manufacturers for their determination and perseverance.

“I salute you for your commitment to surmount the economic realities while working toward stabilisation and expansion,” Onafowokan said.

The AGM featured presentations from Bank of Industry, LECON Finance Company, and Agusto & Co., offering manufacturers practical insights into alternative funding strategies.

Highlighting Federal Government interventions, Onafowokan referenced the ₦75 billion Manufacturing Sector Fund and the ₦75 billion MSME Intervention Fund, both disbursed via BOI at a 9% interest rate and with repayment periods of one to five years. He urged manufacturers to seize these opportunities to expand their production capacity.

Also speaking at the event, Ogun State Commissioner for Industry, Trade, and Investment, Adebola Sofela, who represented Governor Dapo Abiodun, commended the resilience of Ogun manufacturers and reaffirmed the government’s support.

“The Ogun State Government remains committed to improving the ease of doing business through tax harmonisation and infrastructure development,” Sofela stated.

In his remarks, National President of MAN, Francis Meshioye, called on both state and federal governments to actively prioritise local manufacturing through supportive policies and procurement decisions.

“We must support local industries with policy-backed patronage and implement consequences for non-compliance,” he said.

Meshioye further urged the Central Bank of Nigeria to settle the $2.4 billion in unpaid forex forwards owed to manufacturers, noting that prolonged delays were constraining production activities.

He also advocated for the revival of quarterly meetings between manufacturers and regulatory bodies and the rehabilitation of key industrial roads in Agbara and Ota. Additionally, he cautioned against excessive regulation.

“Agencies like the Financial Reporting Council must understand that overregulation discourages productivity,” he remarked.

During a technical session, Associate Director at Agusto Consulting, Oritsejimi Ogbobine, encouraged manufacturers to leverage capital market instruments, including debt and equity funding, green financing, and international development funds.

“To attract capital, manufacturers must improve their credit profile and obtain credit ratings. The financial market rewards transparency,” he advised.

The AGM not only provided a platform for strategic dialogue but also marked the 40th anniversary of MAN’s Ogun State chapter. Manufacturers and stakeholders used the occasion to reaffirm their dedication to strengthening Nigeria’s manufacturing landscape and fostering a better-supported industrial ecosystem.