Manufacturers bemoan challenges threatening BoI’s N200bn facility
DELAY in accessing the Export Expansion Grant (EEG), paucity of local raw materials and inadequate electricity may have been threatening the operations of manufacturers who secured the N200 billion refinancing/restructuring facility from the Bank of Industry (BoI).
Some of the beneficiaries, which include J. Jumac International Company Limited, Nigerian Bag Manufacturing Company Plc (BAGCO), Heroes Furniture Limited and Sunflag Nigeria Limited, visited by the House Committee on Commerce and Industry yesterday in Lagos, urged government to expedite action in tackling these challenges to enable full utilization of the funds from BoI.
The Central Bank of Nigeria (CBN) had made available N500 billion debenture stock to be issued by the BoI. The components were N300 billion for power projects to support infrastructural development and improvement, and a balance of N200 billion for refinancing/restructuring of bank existing loan portfolio to manufacturers to fast-track development of the manufacturing sector in the country and N200 billion Small and Medium Enterprises Credit Guarantee Scheme (SMECGS) to promote access to credit by Small and Medium Enterprises.
But the beneficiaries of the refinancing and restructuring scheme complained to the members of House Committee on Commerce and Industry, led by its Chairman, Onawo Mohammed Ogoshi that the manufacturing sector is operating under various conditions and constraints, which have been compromising the full utilisation of the refinancing fund from BoI.
Addressing members of the committee, the Assistant General Manager, J. Jumac International Company Limited, manufacturers of different designs of suit cases, Mr. Sunny Assenyi, lamented the payment of high tariff due to improper classification of the company’s raw material as finished goods.
According to Assenyi, manufacturers of suitcases, who add up to 60 per cent of local content in raw materials, pay an average of 30 per cent duty, whereas those who import the product completely knocked down form pay only 10 per cent duty.
He added that smuggling of substandard suitcases and bags would soon chase the company out of business, if nothing is done about the influx of the inferior bags into the country.
“Lack of electricity is a big challenge to us. We run our machines on generators except during skeletal operations. Also, Export Trade Liberalisation Scheme (ETLS)-earned export grants are not acceptable for settlement of customs duty. We also have the problem of low patronage of made-in-Nigeria goods by both the Federal and state governments”, he added.
Also, the Managing Director of Heroes Furniture Limited, Mrs. Rita Emerhor, told the committee that the company has suspended production in its modern factory due to lack of electricity.
She said: “We got loan from BoI to acquire machines to increase production of furniture in Nigeria, but has to suspend production and concentrate on a smaller factory due to high cost of generating electricity on our own. We were encouraged to go into manufacturing to support the Federal Government backward integration. Due lack of adequate electricity and raw materials, we are not able to operate at full capacity”.
The Company Secretary and Director of BAGCO, Mr. Korede Okusanya said that delay in accessing the EEG has made the scheme unattractive to Nigerian manufacturers and exporters.
According to him, the company has invested so much on production of packaging materials for local and international markets.
He stated: “Our major challenge is the inability of the Eleme Petrochemical to supply us with the necessary raw materials. We have factories in Lagos and Abuja with over 3,000 staff”.
He commended the BoI for the intervention fund and urged the Federal Government to assist Nigeria manufacturers by providing conducive environment.