THE impact OF HIGH bank LENDING ON manufacturing SECTOR OF THE NIGERIAN ECONOMY
THE IMPACT OF HIGH BANK LENDING ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY
The manufacturing sector is the lifeline of a nation's economy in all nations. Manufacturing is another term for the transformation of raw materials into finished commodities that can be exported to other countries, earning or improving our foreign exchange reserves.
The study looked into the influence of high bank lending rates on the Nigerian economy's manufacturing sector. According to the findings,
there is no positive association between high funding costs and capacity utilisation. It is also possible that enterprises will repair or service old machines as a result of the high bank credit.
Secondary sources were used to acquire data for this investigation. These were taken from periodicals and textbooks. The researcher's results can be used to explore things like:
– The government should implement statutory laws mandating banks to lead to manufacturing enterprises at a reduced rate.
– The federal government should do everything possible to save the naria value as soon as possible.
1.1 BACKGROUND OF THE STUDY
Over the past year, the Nigerian government has made a number of efforts to achieve a highly industrialised, self-sufficient economy. These efforts have resulted from the government's evident recognition of the need of industrialization in economic progress,
and hence the importance of Nigeria's manufacturing sector cannot be overstated. The sector only supplies finished goods, which we require, but for which we must seek foreign exchange through the exports of its products.
Prior to 1980, when oil (back gold) was discovered in River State, agriculture was Nigeria's main source of foreign cash. However, with increased oil production in the early 1970s, agriculture began to lose importance in the economy, and the oil sector has remained Nigeria's biggest foreign cash earner to this day.
However, the oil boom of the early 1970s contributed significantly to the growth of the country's industry. Certainly, it was after the postwar period that the Nigerian government began to adopt measures to develop the economy.
Agriculture as an aid to the growth and development of the manufacturing industry and the economy. Among these was the government's and foreign corporations' combined ownership of industries. The indigenization idea introduced by the Yakubu Gowon government in 1972 was possibly the most significant.
The idea was to reserve some business solely for Nigeria or to increase their involvement. However, this programme was badly administered, as some foreigners utilised Nigeria as a front to avoid regulation.
One of the most important strategies to support manufacturing firms is to make financing available for their operations. Finance appears to be or is the most difficult item to obtain in Nigeria today as a result of various variables, one of the most important of which is the ever-increasing rate of interest.
Nwachukwu (1993:20) states. This is a pity, because manufacturing represents the best potential for the country. It was the possibility of expansion. It could be the fastest growing sector of the economy,
but with the ministry dealing with undercapacity utilisation, the counting is simply not read, to export, and so it is high time industries, governments, and citizens in general developed a concerted effort aimed at normalising the pathetic state of affairs.
1.2 STATEMENT OF THE problem
There are numerous points of view on the impact of high bank lending rates on manufacturing firms.
The primary goal of this research is to conduct a critical examination of the impact of high bank lending rates on the industrial sector.