Some members of the Pharmaceutical Society of Nigeria, PSN, who successfully accessed the Central Bank of Nigeria’s (CBN) Health Sector Support Facility, are challenged with the conversion of the borrowed intervention fund into foreign exchange (forex) for equipment purchase.
They are worried that due to scarcity of forex, many of them are already losing in two fronts occasioned: inflation and depreciation of the naira.
The N100 billion credit support intervention fund is part of proactive measures to cushion the impact of the Coronavirus (COVID-19) pandemic in Nigerian economy.
President of the PSN, Mazi Sam Ohuabunwa said beneficiaries of the funds have now been placed in a position that they are unable to generate necessary cash flow to meet the debt obligation and repay the loan as tabled down in the conditions for accessing the fund.
Ohuabunwa therefore appealed to the federal government and the CBN to extend the moratorium, cut interest rate and extend repayment period of the fund.
He made the appeal during the Finance Correspondents Association of Nigeria (FICAN) workshop with theme “ Nigeria manufacturing sector and CBN N100 billion Healthcare intervention fund, opportunities, challenges and post Covid-19 expectations” .
He said that the funds represents a boost to the health care manufacturing sector which is fashioned to enhance the wellbeing of Nigerians, boost productivity and enhance employment through expansion of production lines, but prevailing factors serves as draw back to achieving the objectives of the funds which appeared to have placed greater burden on the pharmaceutical companies that have so far assessed it.
While lauding the N100 billion intervention fund as major response to the sector from the federal government, the PSN president said that beneficiaries of the fund are currently battling with challenges of securing foreign exchange to pay for the healthcare equipment tied to the funds to enhance expansion and boost productivity.
The problem occasioned by FX scarcity, he said, is further compounded by the divergent rate FX obtainable, instability of the rates and devaluation of the; local currency which has further watered down the value of the funds assessed by pharmaceutical manufacturing firms.
The PSN president affirmed that while the moratorium for the fund is pegged at one year, with single digit interest rate, and factoring challenges posed by the prevailing economic condition, the CBN , he appealed, need to reconsider extending the moratorium period to two years, further drop the interest rate and extend the debt repayment period.
He further appealed to the CBN to make special FX provision for the health sector to enable them deploy the borrowed funds in the importation of equipment. “Give us direct FX line instead of leaving us to the mercy of the commercial banks” he had further appealed.
‘’We have always have issues of FX in the country, when you are given N1billion or N2 billion, you are given one year to begin to meet obligation. CBN need to make a special allocation of FX to all beneficiaries of the fund. If we are not able to start converting the fund to FX, FX losses, depreciation and inflation will eat up the funds. Factor this in and provide us with buffer. Extend the moratorium to two year and extend the repayment period”’ he appealed to the CBN.
He stated that when the FX problem is settled, the manufacturers would be placed in the position to hedge against further losses, hence FX component remains the major problem.
“’ So that we can be able to repay the borrowed funds for it to go round and benefit many companies in the health sector. When you increase productivity, you increase manpower utilisation, create employment and further boost economic development”.
Stressing the need to review the conditions for assessing the N100 billion health sector intervention fund, Ohuabunwa explained that a pharmaceutical company that has been lucky to assess N2.5 billion form the fund, will be left with less than such amount when converted, due to the negative impact of inflation on the economy.
“’ review of moratorium and interest rate by the CBN is imperative because, N2.5 billion intervention fund assessed by a company, if you convert it today, you are not going to get the same amount” the PSN president stated.