The Nigerian Economic Summit Group has backed the stabilisation fund for the real sector, which is aimed at providing single-digit interest rate loans to the manufacturing sector.
The Chief Executive Officer of NESG, Dr Tayo Aduloju, gave the support during a media session on Friday, which was monitored virtually by The PUNCH.
Aduloju, who highlighted the role of industrialisation in the economy of Nigeria, said it required several actions to be achieved.
He said, “Industrialisation requires several things to come together. One, we must be serious that we want to do industrialisation for export. The current macroeconomic condition favours an export-led economy.
“To drive industrialisation, we need two things to happen: first, we must recapitalise for industrialisation. We have advocated and fully support the manufacturing stabilisation fund, a single-digit, long-term interest rate that would help the manufacturers to refinance their balance sheet, their working capital, input for their raw materials and put people back to work.”
According to Aduloju, this is important because as long as the manufacturing sector keeps contracting.
“This is a labour-intensive sector. So, rather than creating more jobs, we are creating fewer jobs. We need to pursue industrialisation,” he averred.
The NESG’s call for concrete action on industrialisation aligns with the sentiments expressed by the Minister of State for Industry, Senator Owan Enoh.
During his inaugural meeting with stakeholders in the real sector on Wednesday, he announced plans to establish a work group dedicated to industrialisation.
According to the minister, the group, which will be formed before the end of the year, will be co-chaired by himself and the President of the Manufacturing Association of Nigeria, Francis Meshioye.
Enoh noted that the workgroup, which he described as a ‘war group’ for the Industrial Revolution, would meet periodically and consult with others.
NESG boss noted that the Nigerian government was beginning to profit from the harmonisation of the segments of the market as reflected in the appreciation of the foreign reserves.
He said, “What used to happen before when we were managing the multiple exchange rates market, we are actually subsidising FX for some people in Nigeria and so the premium was not gained by the government but by someone else and it was not showing in the reserves.
“What is happening now is that the government is gaining and the reserves are reflecting it and that will create the basis for FX stability. However, it is important to manage inflationary pressure, which is still very high. Very likely Christmas inflation will have its effect.”
Aduloju also harped on the need for investment in the energy sector and the recapitalisation of the distribution companies, saying, “The electricity sector needs funding across the board and requires financial intervention in the upstream, midstream and downstream.
“We cannot exclude the recapitalisation of the DisCos. We need to bring in investments and FDIs to improve the infrastructure which is below where it should be. We think it is time to resolve energy supply challenges in Nigeria, and it is to commit to the efficiency of the market and to bring blended finance, not all debt.”
He disclosed that currently, no investor would want to invest in the electricity sector if it was not market-reflective.
“To make it market-reflective, we will need to remove some of the subsidies on the tariffs. We need a system where we can transition to where they improve the infrastructure to supply enough power and collect enough revenue while capitalising the Discos to be able to attract investment,” he explained.
