The Chairman of the Manufacturers Association of Nigeria, Ogun State Branch, George Onafowokan, has urged manufacturers across the country to adopt alternative financing models, including leasing and equity markets, to survive the current harsh economic realities and boost industrial growth.

Onafowokan, speaking at the Ogun State MAN Branch’s 40th Annual General Meeting held on Thursday in Abeokuta, called on stakeholders to explore new funding pathways for the manufacturing sector as the lending rates remain high.

The Ogun MAN chairman, speaking on the theme ‘Financing Manufacturing Concerns: Exploring Alternatives,’ said manufacturers could no longer rely solely on traditional bank loans, which have become unsustainable due to rising interest rates and inflation.

“With the last official MPR at 27.5 per cent as of May, excluding bank charges and processing fees, repaying commercial bank loans has become burdensome. The rate ultimately erodes the profit on goods produced with the loan amount,” he said.

Onafowokan listed leasing, equity financing, green bonds, and support from development finance institutions like the Bank of Industry, the African Development Bank, and the African Export-Import Bank as viable alternatives for manufacturers seeking affordable credit.

“Factory expansion plans often require asset procurement. With the steep cost of forex, interest rates, and other economic factors, leasing equipment with the option of ownership later is an option worth exploring,” he noted.

He lamented the numerous challenges faced by Nigerian manufacturers in recent years, including soaring energy costs, forex volatility, high inflation, and weakening consumer purchasing power.

“By 2024, foreign exchange costs rose as high as N1,605/$1, up from N635/$1 in December 2023 and N447/$1 in December 2022. Production costs skyrocketed while warehouses filled up with unsold goods due to declining consumer demand,” Onafowokan noted.

Despite these hurdles, he commended manufacturers in Ogun State for their resilience, saying, “I salute you for your commitment to surmount the economic realities while working towards stabilisation and expansion.”

The AGM featured presentations from the Bank of Industry, LECON Finance Company, and Agusto & Co., which provided practical insights into alternative financing options.

Highlighting recent interventions by the Federal Government, Onafowokan pointed to the N75bn Manufacturing Sector Fund and N75bn Micro, Small, and Medium Enterprises Intervention Fund, disbursed through the BOI at nine per cent interest with repayment periods of one to five years.

“These are opportunities manufacturers must take advantage of to expand production capacity,” he said.

Also speaking at the event, the Ogun State Commissioner for Industry, Trade, and Investment, Adebola Sofela, who represented Governor Dapo Abiodun, praised the resilience of the state’s manufacturers and assured them of the government’s continued support.

“The Ogun State Government remains committed to improving the ease of doing business through tax harmonisation and infrastructure development,” Sofela said.

The National President of MAN, Francis Meshioye, called on both state and federal governments to prioritise local manufacturing through policy and procurement.

“We must support local industries with policy-backed patronage and consequences for non-compliance,” he said.

Meshioye also urged the Central Bank of Nigeria to settle the $2.4bn in unpaid forex forwards owed to manufacturers, warning that the continued delay stifled production.

He called for the revival of quarterly meetings between manufacturers and regulatory bodies and for the rehabilitation of industrial roads in Agbara and Ota, as well as the curbing of regulatory excesses.

“Agencies like the Financial Reporting Council must understand that overregulation discourages productivity,” he said.

In a technical session, Associate Director at Agusto Consulting, Oritsejimi Ogbobine, advised manufacturers to embrace funding from the capital markets through debt and equity instruments, green financing, and international development finance.

“To attract capital, manufacturers must improve their credit profile and obtain credit ratings. The financial market rewards transparency,” he said.

The AGM marked the 40th anniversary of MAN’s Ogun State chapter. Members and stakeholders used the occasion to reaffirm their commitment to building a stronger and better-supported manufacturing ecosystem in Nigeria.