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FG to cut cost of funding for manufacturers, targets 15% real sector contribution to GDP

By BusinessNews Staff on August 30, 2014

President Goodluck Jonathan yesterday said the federal government had concluded plans to bring down the cost of funding to the real sector of the economy through its new programme called the Financing Value Chain Initiative (FVCI).

The president explained that this move by the federal government would give manufacturers in the country the opportunity to extend their loan repayment periods and also create access to new opportunities for the industrial sector.

Jonathan, during the 42nd annual general meeting of the Manufacturers Association of Nigeria (MAN), stressed that the initiative, when fully implemented, will provide small and large businesses in the country reasonable and affordable long-term funding opportunities.

He stated that the Nigeria Industrial Revolution Plan (NIRP) offered a unique pathway to Nigeria’s industrialisation, which is taking into consideration, areas of comparative advantage, relative to the rest of the world in terms of the nation’s natural endowment.

The president, who was represented by the Vice-President, Namadi Sambo, noted that the NIRP had made remarkable achievements within a short implementation period, maintaining that the programme had impacted positively on the country’s image.

According to him, Nigeria is no longer a country that consumes and produces primary products, but one that can manufacture, build and add value.

“Our manufacturing current contribution to the rebased Gross Domestic Product (GDP) stands at 6.7 per cent, with the NIRP. We are driving these efforts towards 15 per cent. We shall use this to create millions of jobs, create wealth, diversify our economy, broaden exports and increase government’s income.

“We hope to leverage on these to create vibrant industrial cities and parks within the country in the shortest possible time. Necessary support structures and enablers are being put in place to make the industrial sector globally competitive,” he said.

The president explained that the federal government had put in place appropriate policies, programmes and projects aimed at effectively tackling some of the constraints facing the manufacturing sector, adding that the measures will not only impact on the manufacturing sector, but also to other sectors such as agriculture, education, health and human services.

“As you are aware, we have already privatised power generation and distribution in order to significantly and effectively increase power supply to the industry and other sectors. This will enhance installed capacity utilisation and reduce cost of production. We intervened just last week by paying off a debt of over N25 billion these generation companies owed for gas supplies to guarantee uninterrupted supply of gas,” he said.

Jonathan said government’s medium and long-term objective was to improve the competitiveness of the manufacturing industries in both domestic and external markets.

He added that the NIRP, which was launched by the present administration, is a homegrown initiative, which is expected to position Nigeria among the top industrialised nations in the long term.

President Jonathan said the result of this industrialisation programme is becoming manifest, adding that manufacturing has become Nigeria’s biggest driver of economic growth.

“The manufacturing sector reported 22 per cent growth in 2013, compared with 14 per cent in 2012. Capacity utilisation increased from 46.3 per cent at the start of 2013, to 52.7 per cent at the end of 2013, with further improvements continuing this year 2014,” he said.

Earlier, the President of MAN, Dr. Kola Jamodu, said the meeting tagged, ‘Positioning Manufacturing for Global Competitiveness’ was informed by the current state of the nation’s local manufacturing environment vis-à-vis the unfolding pressure to subject the economy to external market imperatives in the face of globalisation.

He added that the nation’s manufacturing sector demonstrated the potential to boost economic growth and stimulate social factors of employment generation, wealth creation and poverty reduction, owing to its forward and backward linkages to other sectors of the economy.

Jamodu said according to the National Bureau of Statistics (NBS), manufacturing contribution to GDP was 9.2 per cent for the year 2013, adding that a sample survey of some member companies, before the rebasing exercise, showed increased output estimated at about N483.53 billion in the second half of the year.

“This gives an increase of about 36.9 per cent compared with the mid-year figure of N352.2 billion and 121 per cent increase on the end of year 2012 figure of N218.6 billion. This remarkable increase was attributed largely to the contribution of the food and beverage sector as well as the cement sector.

“Other factors responsible for this growth included stability in macro-economic indices, increased investment operators and various government incentives channeled towards the sector,” he said.

[This Day]

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