Nigeria’s industrial base still weak in more than a half-decade
Nigeria’ Central Bank weekend unveiled its new 100 for 100 PPP (Policy on Production and Productivity) which it said is aimed at supporting 100 companies that have the greatest potential to achieve significant scale in their local production for domestic consumption and exports. The programme is a financing scheme designed to provide targeted funding (in Naira) under existing CBN’s intervention programmes to 100 high-impact companies and projects every 100 days, as well as foreign exchange funding for new machinery.
According to the guidelines published by the apex bank on its website, the objectives of the policy are to reduce reliance on imports and drive sustainable employment-led economic growth through increased domestic production and productivity.
However, the selection criteria for the programme limits the instrument to only new projects and would not cover any refinance of existing facilities.
Some experts have lauded the initiative while stating that it could help support some of the businesses that are reeling in difficulty in the Nigerian business environment. They also called on the government to complement the apex bank’s efforts in addressing the inherent business risks.
“The headwinds confronting businesses in the country extend beyond funding. We opine that the harsh business environment induced by policy inconsistencies, high insecurity, poor infrastructure, multiple taxation, and overregulation, threaten the prospect of any meaningful take off in terms of productivity in the short-to-medium term. We, therefore, recommend that the fiscal authority complement the efforts by the CBN in addressing the inherent risks affecting businesses,” said Afrinvest Research analysts.
Economic experts at Vetiva Capital Research said: “The objectives of the policy are to reduce reliance on imports and drive sustainable employment-led economic growth through increased domestic production and productivity. While the 100 for 100 PPP improves on existing development policies, we believe the policy could drive sector-wide growth and boost employment levels over the medium term.”
Meanwhile, the CBN said participating companies and eligible projects must source over 50 percent of raw materials and at least 80 percent of jobs locally. Also, the channeling of efforts to enhance the productive capacity of the economy would reverse the negative trend of high unemployment rate, boost output, and reduce import bills. Though Nigeria’s industrial base has weakened over the last 5 years at a faster pace than the broader economy.