During the St. Rachael’s Pharmaceutical Finance Forum in Lagos, experts within the Pharmaceutical Industry appealed to the Central Bank of Nigeria (CBN) to Significantly reduce the Cash Reserve Ratio (CRR) for Deposit Money Banks (DMBs) from the current 32.5 percent to a more Conducive 10 percent.
Their Rationale behind this request is to Bolster the liquidity of DMBs, Encouraging them to extend Increased lending Support to the vital Manufacturing Sector.
Dr. Akinjide Adeosun, Chairman of St. Rachael’s Pharmaceutical Nigeria Limited, emphasized the Importance of Strengthening Nigeria’s local Pharmaceutical Manufacturing Capabilities.
He pointed out that Currently, 40 percent of Pharmaceutical Products are manufactured Domestically, while the remaining 60 percent are Imported.
Dr. Adeosun expressed his Company’s Ambitious plans to Launch a World-Class Pharmaceutical manufacturing plant in Nigeria by the year 2027.
To achieve this Goal and Foster the Growth of the Pharmaceutical Industry, Dr. Adeosun emphasized the need for DMBs to offer long-term, low-interest Loans with lenient Moratorium periods.
In his view, this kind of Financial Support is crucial to Establish and Sustaining a thriving Pharmaceutical Manufacturing Sector in the Country.
Consequently, he urged the CBN to take the necessary steps to reduce the CRR, which would Enable Commercial Banks to provide more Loans to Prospective Ventures.
Supporting these sentiments, Dr. Ayodeji Alaran, Chief Executive Officer of PBR Life Sciences, highlighted some of the challenges faced by pharmaceutical manufacturing companies in 2022. These challenges included a staggering 125 percent increase in energy costs, with energy cost-to-revenue ratios reaching 4.0 percent. Furthermore, he stressed that these companies encountered issues with low profitability, recording only 18 percent profit before tax (PBT) and 5.0 percent Profit After Tax (PAT) compared to the significantly higher averages of 38 percent and 31 percent respectively, seen in the banking sector.
The consensus among the experts at the forum was clear – a reduction in the CRR would serve as a crucial step towards providing the necessary financial impetus for the growth and development of Nigeria’s pharmaceutical manufacturing sector, ultimately fostering self-sufficiency and progress in the nation’s healthcare industry.
