By Gilbert Alasa.
Group Managing Director of Skye Bank Plc, Mr. Timothy Oguntayo, on Wednesday, said Nigerian banks are ready to support the nation’s manufacturing sector but recent developments in the operating environment have made many lenders to be sceptical in providing loan facilities to industrial firms.
Oguntayo, who was a discussant at the Manufacturing Sector Overview And Outlook stakeholders conference held at Four Points By Sheraton in Victoria Island, said the risks associated with lending to manufacturers are reasons why many commercial banks are discouraged from giving loans to manufacturing companies.
“The banks are ever ready to lend to anybody as far as the debtor can generate the resources to fulfil the financial obligation as at when due. But bankers would not lend money to manufacturers when they are not sure of recouping their money,” he said.
The ratio of non-performing loans is said to be skyrocketing to high heavens, rising by approximately 70 per cent to N628.54 billion at end-June 2015, from N363.31 billion at end-December 2014. Oguntayo said: “Our commercial banks are not structured to finance manufacturing on the long term. Government, the Central Bank of Nigerian and Pensions Commission, PENCOM should begin to look at how best to reinvest the billions of pension funds,” adding that manufacturers could profit from the move.
Recent developments in the nation’s economy suggest that more manufacturing firms are set to swim in troubled waters in 2016 due to forex crisis in the face of a hostile business environment, a situation which impedes profitability of manufacturing firms and further minimise their chances of accessing loan facilities for investment.
By Gilbert Alasa.