Manufacturing gets CBN’s N150b push




The comatose manufacturing sector is to receive a N150 billion life-line from the Central Bank of Nigeria (CBN). Some 150 entrepreneurs and existing industries are to get N1 billion each to revive their operations.


The N150 billion is part of the N500 billion infrastructural revival fund packaged late last year for power and other baseline infrastructure revival. The credit carries a 15-year tenure with an interest of seven per cent.The CBN Governor, Malam Sanusi Lamido Sanusi, who announced the good news in Abuja yesterday said plans had been concluded for the signing of agreement with banks that would be used for the disbursement of the funds next week.


He regretted however that no request has been received from companies in the power sector because of the delay in the conclusion of its reform.However, there are indications that the Senate and Federal Capital Territory Administration (FCTA) may be headed for a major disagreement following the decision of the latter to take a $500 million (N75 billion) Chinese Government loan to build rail line in Abuja, a facility the federal lawmakers vehemently oppose.


The Federal Government plans to make available the balance of $340 million for the project.Sanusi was reacting to inquiries from reporters on the progress of the infrastructure revival fund at the end of the apex bank’s highest economic policy organ meeting, the Monetary Policy Committee (MPC) where decisions to shape the direction of the economy every two months are taken after a review of the economic performance of the previous months. The meeting yesterday kept the monetary policy rate (MPR)- that is, the rate at which the CBN lends money to deposit banks at 6 per cent, including the corridors they are allowed in the administration of their interest rates.


Sanusi said concerning the manufacturing sector releases: “ We have concluded arrangement to release the sum of N150 billion to some 150 companies in the manufacturing sector in the first tranche release of the infrastructure fund. We will be signing agreements with banks that will be disbursing the credit next week.      Each of the companies is to get N1 billion each. Unfortunately, we are yet to receive bids for companies in the power sector. And this is due to the delay in the power sector reform that is on-going.’’Meanwhile, Sanusi who put the country’s current gross external reserve at U.S.$37.63 billion as at June 23, 2010 said the amount represents a decrease of US$1.19 billion or 3.06 per cent when compared with the level of US$38.82 billion as at 31st May 2010.


He explained that the consistent drop from the reserves level which had risen to over $60 billion in 2008, was because of the huge sum of more than  $25 billion oil revenue lost between late 2008 and 2009, arising from failing oil prices and activities of Niger Delta militants. The current reserves, he said is still adequate as it would finance 16 months of import, compared to the internationally recommended benchmark of three months of import cover for a country’s external reserves.


He reeled out some of the MPC’s considerations and the review of the economy in the past quarter: “Against the backdrop of the foregoing, the MPC noted with satisfaction the continued macroeconomic stability. It, however, stressed the need to grow the real sector on a sustainable basis. It also reiterated the possible inflation risks highlighted at the last MPC meeting, in the light of the anticipated budget deficit and the operationalisation of the proposed Asset Management Corporation. However, monetary aggregates are still underperforming and the Asset Management Corporation is yet to take-off. On balance, therefore, the inflation threat remained subdued in the short to medium term. In addition, some of the approved quantitative easing measures are yet to be completely implemented.


“The Committee, therefore, considered it appropriate to continue to monitor developments with a view to intervening as the need arises. In the light of the above, the committee decided that: No changes are made to the current policy stance viz: the MPR should remain unchanged at 6.0 per cent; and the asymmetric corridor of 200 basis points above and 500 basis points below the MPR, respectively, are to be retained.


“ The Committee observed that the impressive output growth recorded in 2009 continued in 2010. Provisional data from the National Bureau of Statistics (NBS) indicates that real Gross Domestic Product (GDP) grew by 7.23 per cent in the first quarter of 2010 up from 4.50 per cent recorded in the first quarter of 2009. GDP was projected to grow by 7.68, 7.76 and 8.13 per cent in the second, third and fourth quarters of 2010 respectively.Overall GDP growth for 2010 is projected at 7.74 per cent, which is higher than the revised figure of 6.66 per cent recorded in 2009.   The non-oil sector is expected to remain the main driver of overall growth, with agriculture, wholesale and retail trade, and services contributing 2.49, 2.03 and 2.11 per cent, respectively.


“The Committee believes that the impressive growth forecasts reflected prospects for moderate rainfall in 2010, which is expected to support the production of major crops across the country, coupled with the current peace in the Niger Delta, which has led to an increase in crude oil and natural gas production. It, however, cautioned that there is a thick cloud hanging over commodity producing countries because of the current crisis facing the Euro Area and emerging slowdown in manufacturing in major Asian countries and the U.S. as indicated above. In addition, the Committee highlighted the binding constraints on the domestic economy namely; infrastructure inadequacy, lack of access to finance, lack of requisite skills, unfavourable trade policy and a poor investment climate all of which have the potential to constrain economic growth. The MPC, therefore, stressed the need for government to pursue macroeconomic, structural and institutional reforms that appear to have slowed down in the past few years.


“The year-on-year headline inflation declined to 11.0 per cent in May 2010 from 12.5 per cent in April and 11.8 per cent in March. Similarly, core inflation fell to 8.8 per cent in May 2010 from 9.8 per cent in April and 9.5 per cent in March. The downward trend in the domestic price level could be attributed to a number of factors, including the continuing underperformance of monetary aggregates, with the associated constrained demand, adequate food supply, stable exchange rates and improvement in the availability of petroleum products, amongst others. Notwithstanding these developments, the MPC reiterated its earlier position on the threat of inflationary pressure arising from several factors including the announcement effect of salary increase in the civil service and the rising food prices against the backdrop of the famine in neighboring Niger Republic. The Committee restated its commitment to continue to monitor price developments with a view to taking appropriate measures to stem any inflationary threat and ensure that the downside risk of inflation to growth is minimised.”


The Senate directed that the plans to get the Chinese loan be stopped last April when the Chairman of the Senate Committee on Appropriation, Iyiola Omisore, told his colleagues that the 10 percent interest rate offered by the Chinese government was the highest unacceptable and unprecedented.But yesterday, there were indications that the inclusion of the Minister of Federal Capital Territory, Senator Bala Mohammed, on the official entourage of the Minister of Finance, Olusegun Aganga and Minister of Transport, Suleiman Yusuf for a China trip may be connected with further negotiations on the project and its financing.


When contacted for clarification on the project, the Special Assistant [Communication] to the Minister, Nosike Ogbuenyi, insisted that no loan had been taken. He stressed that as soon as he had more details on the planned trip of the Minister, he would release it to the public.He disclosed that the Minister was attending a meeting, and could not immediately comment on the loan or trip.


Among other lawmakers who opposed the planned loan from China and other projects in the Federal Capital Territory (FCT) budget of N350.240 billion were Effiong Bob, Uche Chukwumerije, and Jubril Aminu, who said there were other more acceptable sources of loans than what the Chinese government was offering.Many suggested exploiting the Public Private Partnership (PPP) option of executing projects.


Senate Leader Teslim Folarin, said: “Over 90 percent of the FCT is still without potable water. The few hospitals are fast losing essence. Unlike other cities like Lagos, the FCT does not have adequate private hospitals to complement the public hospitals and clinics.He added: “It is therefore fast becoming a risky thing to fall ill in the FCT. Also, the standard in the public school system is falling by the day.


“The population of pupils and students in the public schools is growing daily as parents from across the country are bringing their children and wards to the FCT. The FCT requires a minimum of N300 billion to resuscitate and complete abandoned and ongoing projects within few districts that have so far been developed like water that have high socio-economic value to residents and visitors of the FCT, infrastructure layouts in districts, engineering and electrical projects, sewage and refuse management facilities.”


The FCTA assured last October that it would do everything possible to ensure that the Abuja Light rail project is completed and commissioned in 2013.The then minister, Senator Muhammad Adamu Aliero, gave the assurance when he undertook an inspecting tour of the $840 million contract project awarded to the Chinese Civil Engineering Construction Company (CCECC) located at the Idu Industrial park in the territory.


The rail contract initiated by former Minister, Malam Nasir el-Rufai, is designed to ease the transportation crisis in the Federal Capital Territory.The Executive Director of the company, Jerk Lee, disclosed then that the laying of tracks for the light rail would commence this year October even as he said that the company would start manufacturing relevant components like sleepers in Nigeria rather than importing them from China.


Lee assured that the delivery of the project would not fail as the government has given them all the necessary support towards the completion of the 70-kilometre project.





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