Executive chairman of United Technologies Limited, Aderemi Abdul-Bojela, has said the development of a consumer credit scheme will drive growth in Nigeria’s manufacturing sector and improve its contribution to the country’s gross domestic product (GDP) by boosting patronage of locally-made goods.
Abdul-Bojela spoke to journalists on Friday during the presentation of a proposed Federal Government consumer credit guarantee scheme (FGN-CCGS) — an innovative blueprint designed to support local manufacturers.
He said the government, in the last 15 years, has provided fiscal and monetary interventions worth trillions of naira to various sectors of the economy to stimulate manufacturing with concessionary rates.
But despite these government interventions and concessionary rates, the real sector growth has been anaemic, he said, as it only addresses the supply side of manufacturing.
Bemoaning the state of the sector, Abdul-Bojela said loan repayment by beneficiaries of the interventions has been a challenge due to low inventory turnover.
“Expected economic benefits such as job creation, reduction in import dependencies, and GDP growth are not fully realised,” the industrialist said.
“The products are not competitive. The manufacturers are under-producing, leading to competition from imported goods from countries that can produce at a large scale and drive down production cost.”
Abdul-Bojela said the adoption of the scheme would support the Federal Government’s major goals of stimulating economic growth and development, as well as diversification of the economy, and job creation.
He described the proposed scheme as the innovation the country needs to reposition its real sector and make Nigeria the largest producer as the African Continental Free Trade Agreement (AfCFTA) commences.
He said the initiative would improve the lives of consumers by making credit available to them at a single-digit interest rate for their immediate needs.
“What we’re trying to achieve is to move Nigeria into the acquisition of made-in-Nigeria. So, there has to be a series of incentives. You earn a salary. I cannot decide for you what to do with your salary. You have the prerogative to say I’m going to buy this or buy that,” he said.
“But for me to request you buy made-in-Nigeria, I must give you some incentives. Part of the incentives for this scheme is that the interest rates will be single-digits.
“Somebody like you who wants to buy an LG air conditioner, what are the incentives that will make you go and buy what is made in Nigeria? First of all, lower interest rates, and tenure of not less than 12 months for you to be able to pay back. So, part of the guarantee also is that the government should reduce the interest rate. They should not match it with the MPR. It should be below 10 percent.”
Speaking on other benefits of the proposed scheme, Abdul-Bojela said it would encourage manufacturers targeting the Nigerian and African markets to set up operations in the country to take advantage of the scheme. He said the FGN-CCGS also aims at driving consumer credit penetration and encouraging the formalisation of the informal sector.
“It will push consumption towards the acquisition of products made in Nigeria and increase the tax base and revenue,” Abdul-Bojela added.
“Reduce the possible negative effect of AfCFTA regulation, while building a solid real sector base, for both internal consumption and export.” He added that the scheme would focus on the textile industry, electronics, furniture and fittings, automobile, and service sector.