The Manufacturer’s Association of Nigeria (MAN) has said that productivity in the country is throttled by banks’ additional charges that push up the interest rates on loans.
This was disclosed in a report by the association adding that of the Chief Executives interviewed, 71 percent were for the notion that productivity was stifled by the lending rates of banks to manufacturers.
Of the remaining 7 and 22 percent; the report stated that the latter believed that lending rates of banks did nothing to discourage productivity, while the remaining 22 percent were on the fence on whether the lending rates of banks negatively or positively impacted productivity in the manufacturing sector.
“Special single-digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.
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“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector,” stated the report.
It added that the report was a clear indication that there should be consistent monitoring to ensure that the Loan to Deposit Ratio policy by the CBN is implemented effectively for the objectives behind the policy to be achieved.
This move, the report says, would stimulate economic recovery and steer the country back to the path of growth, away from the chokehold of the current recession keeping the economy wheel clogged.
“This finding clearly highlights the need to continuously monitor and ensure effective implementation of the Loan to Deposit Ratio policy of the Central Bank to ensure actualisation of the objectives behind its formulation.
“This will further promote economic recovery and ensure quick return to the path of growth from the trap of recession that is currently holding the economy down,” it added.
“While appreciating the efforts of government to improve the state of infrastructure in the country, respondents’ opined that the low allocation for provision of infrastructure facility in the yearly budget, the poor implementation of the budgetary provisions and the absence of monitoring and evaluation mechanism to interrogate the implementation of the budget and relevant Executive Orders.
“This development has left the country’s infrastructure in a dilapidated state and has not been able to spur the desired economic growth through enhanced real sector productivity.”
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