The Manufacturers Association of Nigeria (MAN), said its members spent about N60.47 billion in alternative energy sources to support production from January to June 2023.
In a half year executive summary of the economy the MAN, though admitted that power supply to industries rose marginally but manufacturers required more than the supply which necessitated the whopping expenditure.
According to its findings, electricity supply to the industries from the national grid in the first half of 2023 increased marginally to 11.3 hours per day from 10.2 hours recorded in the same period of 2022. Additionally, it increased by 42 minutes when compared with 10.6 average hours per day of electricity supply in the last half of 2022.
In the same vein, the average number of outages per day increased marginally to 4.7 times from 4. 4 times in the first half of 2022. Consequently, expenditure on alternative energy sources declined to N60.47 billion in the first half of 2023 from N76.70 billion recorded in the second half of 2022, thus indicating N16.23 or 21.2 per cent decrease in the period.
It also declined by N7.33 billion or 10.8 per cent from the N67.8 billion recorded in the same period of 2022. The MAN said, one of the major hurdles confronting the manufacturing sector in the country is the high cost of obtaining funds.This challenge is substantiated by data gathered during the fieldwork for the first half of 2023 report.
According to this data, the average lending rate to the manufacturing sector from commercial banks remained high at 24 per cent when compared with what was recorded in the corresponding half of 2022. However, the cost of funds for the manufacturers increased by 2.0 percentage points when compared with 22.0 per cent recorded in the second half of 2022.
The lending rates offered by commercial banks to industries are significantly influenced by the continuous upward adjustments in the Monetary Policy Rate. These adjustments aim to maintain a favourable real interest rate environment, with the goal of attracting foreign investment inflow, defending the domestic currency (Naira) and curbing the spiraling inflation.