Crash Lending Rate To Single Digit, Pharmaceutical Manufacturers Appeal To Government

From left to right : Pharm. Adewale Oladigbolu, President, Association of Community Pharmacists of Nigeria ( ACPN); Pharm. Akinjide Adeosun, Chair, St Racheal’s Pharmaceuticals and also Chairman of the Occasion , Chioma Obinna, HEWAN President and Pharm Moses Awola, Representing Dr Kemi Ogunyemi, Special Adviser to Lagos State Governor on Health during HEWAN ‘s 13th Annual Symposium/Excellence Award recently in Lagos.

Nigerian manufacturers in the pharmaceutical sector have bemoaned the high interest rate, claiming that it is destroying the sector, therefore calling on government to crash lending rate to a single digit.

According to them, the current interest rate is as high as 38 percent.

Pharmaceutical manufacturers, who convened at the 13th Annual Symposium and Award Ceremony, organized by the Health Writers Association of Nigeria (HEWAN), in Lagos, averred that no company could function on this percentage, while simultaneously urging the federal government to lower the Monetary Policy Rate (MPR) to 20 percent or less.

Chairman of ST.RACHEAL’S Pharmaceutical Nigeria Limited, Pharm. Akinjide Adeosun said Multinational corporations like GSK, Sanofi, and others have lately left Nigeria, and their departure has left a vacuum in the country.

Operating in Nigeria has proven to be extremely tough for these pharmaceutical businesses due to a demanding economic environment that includes variable exchange rates, hefty import levies, stringent regulatory processes, and bureaucratic impediments, Adeosun noted.

While the federal government of Nigeria, through the Central Bank of Nigeria (CBN) has steadily raised the MPR to reduce the high rate of inflation, this is no longer sustainable, Adeosun said, even as he urged the government to focus on growth rather than inflation.

“The strategy of the federal government has been to increase MPR. Recall that inflation is when you have fewer goods being chased by plenty of money, and when that happens, you will have an increase in prices of goods. It is a global norm that when you want to stem inflation, you must increase MPR, because once you increase MPR, lending increases, thereby mopping up excess money in circulation.

“No doubt, the governor of CBN, Olayemi Cardoso is doing an excellent job since he came on board, because he has been able to use monetary tools to be able to manage the economy. If he hasn’t done what he is doing around monetary policy, probably, Nigeria would have been in dire situation by now.

“However, after trying this for a year, and inflation is still high; the lending rate is also high, it is time to switch gear. When you borrow money at an interest rate of about 38 percent to import drugs into the country, coupled with the high cost of fuel/diesel, clearing cost, import duties and levy duties (as not all drugs attract zero per cent. Import duties may be zero per cent, but levy is about 20 per cent), no business can survive.

“CBN has been increasing MPR for about a year, without any concrete result. It is now time to leave  inflation alone and start chasing growth. You cannot chase growth, if manufacturers cannot borrow at a single digit,” he explained.

Recall that the Tinubu’s administration created a window where manufacturers can borrow between N500 million to N1 billion, at nine percent interest rate. Adeosun lamented that the fund is not accessible, as he has applied for almost two months now, but hasn’t seen anything. 

Adeosun however urged the government to chase growth and leave inflation alone, adding that, “Reduce MPR (@26.25 percent) to enable commercial lending rate crash to single digit from the present over 30 percent thereby stimulating economic growth. | recommend a managed float of the currency. The current N1, 500.00 to 1 USD exchange rate is not sustainable in the long term.”

To tackle insecurity in the country, the chairman tasked the federal government to recall and deploy retired security personnel (Police, DSS & Military) to the wards in local government areas to assist in curtailing insecurity, as it will help food production.

Government should provide grants (not loans) to businesses, Adeosun recommended, adding that, “govemment should consider selling nonperforming assets to generate foreign exchange. (E.g. Federal Secretariat & Nitel buildings in Lagos). I encourage FIRS to focus on only eight tax types accounting for 90 per cent of tax revenue and delete 54 tax types which are ‘impediments to business growth.

“In addition, small tax payer with businesses with annual turnover of less than N1billion should be given Tax Holiday for one year. Medium to large tax payers should have corporate income tax (CIT) reduced from 30 per cent to 20 per cent to help cushion the shock of the operating environment. Import duty, import levy should be deleted to enhance the survival of the pharmaceutical sector. If these strategies are executed, we can tum the difficulty of stagflation into the superhighway road that will lead us into economic prosperity.”

Adeosun also urged company owners to diversify if they want their companies to thrive. “Outsource non-essential parts of your business and focus on your core business. You may consider per hour or per day wage to improve productivity. Consider installing Solar panels (Expensive near term but affordable long term).This clean energy helps to preserve our ecosystem,” he advised.

In the same vein, the national chairman Association of Community Pharmacists of Nigeria (ACPN), Pharm. Adewale Oladigbolu said the pharmaceutical sector is depressed. “This industry affects everything we do as a country since a healthy population is productive and contributes to economic prosperity,” he added.

Oladigbolu said the pharmaceutical industry has a funding gap in billions of naira, adding that,  “We don’t have enough capital to operate. We don’t also have enough facilities in Nigeria to produce drugs locally. Government must come in heavily. The same kind of interventions seen in the petroleum industry should be done in the pharmaceutical sector. We need the government to give grant to the industry. Government has great intentions to transform the industry, but those intentions have not been translated to practical means. It is time for government to take action, by fulfilling its promises to the industry.”