Nigerian pharmaceutical manufacturers are raising alarms over the debilitating impact of soaring interest rates, claiming they are hampering growth and threatening the industry’s survival.
At the 13th Annual Symposium and Award Ceremony organized by the Health Writers Association of Nigeria in Lagos, manufacturers highlighted that the high interest rates, reaching up to 38 percent, have become a critical barrier to operational sustainability. They urged the government to lower the rates to 20 percent or less.
The manufacturers argued that the government’s focus on combating inflation through high interest rates is detrimental to the economy and suggested prioritizing growth instead.
Akinjide Adeosun, Chairman of ST. RACHEAL’S Pharmaceutical Nigeria Limited, noted that multinational corporations like GSK and Sanofi have left Nigeria, creating a vacuum in the market. He attributed their departure to Nigeria’s challenging economic environment, characterized by variable exchange rates, hefty import levies, stringent regulatory processes, and bureaucratic impediments.
Adeosun criticized the Central Bank of Nigeria’s (CBN) approach of steadily raising the Monetary Policy Rate (MPR) to curb inflation, arguing it is unsustainable. He suggested the government should shift its focus to fostering growth rather than solely targeting inflation.
“The strategy of the federal government has been to increase the MPR. Recall that inflation occurs when there are fewer goods being chased by plenty of money, leading to higher prices. It is a global norm to increase MPR to stem inflation, as higher MPR raises lending rates, mopping up excess money in circulation. The CBN Governor, Olayemi Cardoso, has managed the economy well using monetary tools. However, after a year of this strategy with no concrete results, it is time to switch gears. When borrowing money at an interest rate of about 38 percent to import drugs, coupled with high fuel/diesel costs, clearing costs, import duties, and levy duties, no business can survive,” Adeosun explained.
Adeosun also proposed measures to tackle insecurity, boost food production, and support businesses. He suggested recalling and deploying retired security personnel to local government wards, providing grants (not loans) to businesses, and selling nonperforming assets to generate foreign exchange. He also encouraged the Federal Inland Revenue Service (FIRS) to focus on the primary tax types and offer tax holidays for small taxpayers and reduced corporate income tax for medium to large taxpayers.
Additionally, Adeosun urged company owners to diversify their operations, outsource non-essential parts of their business, and consider sustainable energy solutions like solar panels to improve productivity and preserve the ecosystem.
Adewale Oladigbolu, National Chairman of the Association of Community Pharmacists of Nigeria, added that the pharmaceutical sector is depressed and underfunded, with a significant funding gap and insufficient facilities to produce drugs locally. He called for substantial government intervention, similar to what has been seen in the petroleum industry, to support the pharmaceutical sector.
“The pharmaceutical industry impacts everything we do as a country since a healthy population is productive and contributes to economic prosperity. The government needs to take action and fulfill its promises to the industry,” Oladigbolu emphasized.
