The Chairman of the Manufacturers Association of Nigeria (MAN), Ogun State Branch, George Onafowokan, has called on Nigerian manufacturers to embrace alternative financing options such as leasing, equity funding, and green bonds to cushion the impact of economic challenges and sustain industrial growth.
Speaking at the 40th Annual General Meeting of the Ogun State MAN Branch in Abeokuta on Thursday, Onafowokan said the reliance on traditional bank loans had become unsustainable due to rising interest rates and inflation.
“With the Monetary Policy Rate at 27.5 per cent as of May—excluding additional bank charges—servicing commercial loans has become increasingly difficult. The high rates erode profit margins on goods produced with such loans,” he said.
He advocated for alternative financing models such as leasing, equity markets, and support from development finance institutions like the Bank of Industry (BOI), African Development Bank (AfDB), and African Export-Import Bank (Afreximbank).
Onafowokan particularly highlighted leasing as a viable solution for capital expansion, saying, “Factory upgrades and equipment procurement can be achieved through leasing arrangements with ownership options, especially amid forex scarcity and high interest rates.”
He noted the tough macroeconomic conditions manufacturers face, including volatile exchange rates, inflation, high energy costs, and weakening consumer demand.
“In 2024 alone, the naira depreciated to N1,605/$1 from N635/$1 in December 2023 and N447/$1 in 2022. Production costs surged, while warehouses filled up with unsold inventory,” he said.
Despite these setbacks, Onafowokan commended Ogun manufacturers for their perseverance and adaptability in navigating the economic climate.
The AGM featured presentations by the BOI, LECON Finance Company, and Agusto & Co., which offered guidance on funding through capital markets, green bonds, and structured finance.
Onafowokan also drew attention to government-backed financing initiatives like the N75bn Manufacturing Sector Fund and a separate N75bn MSME Intervention Fund, available through BOI at nine per cent interest over one to five years.
“These programmes are important tools for capacity expansion and must be fully utilised,” he stated.
Representing Governor Dapo Abiodun at the event, the Ogun State Commissioner for Industry, Trade and Investment, Adebola Sofela, reiterated the state government’s commitment to improving the business environment through tax harmonisation and infrastructure upgrades.
The National President of MAN, Francis Meshioye, also addressed the gathering and urged both federal and state governments to prioritise local manufacturers through supportive policies and procurement practices.
He called on the Central Bank of Nigeria to resolve the backlog of $2.4bn in unpaid forex obligations to manufacturers, warning that the delays were stifling production and threatening jobs.
Meshioye further advocated for the revival of quarterly industry-regulator engagements, the rehabilitation of key industrial roads in Ota and Agbara, and a clampdown on excessive regulation.
“Regulatory bodies must strike a balance. Overregulation discourages innovation and growth,” he said.
In a technical session, Oritsejimi Ogbobine, Associate Director at Agusto Consulting, encouraged manufacturers to improve their credit ratings and transparency to access funding through debt, equity, and development finance channels.
The event, which marked MAN Ogun’s 40th anniversary, ended with a renewed call for strategic collaboration between the private sector and government to build a stronger and more resilient manufacturing ecosystem in Nigeria.
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