Tackle inflation, FX challenges, MAN tells Tinubu - PUNCH
The Manufacturers Association of Nigeria has urged the President-elect, Senator Bola Tinubu, to immediately look into key manufacturing challenges such as high inflation rate, exchange rate volatility, among others.
The association, in a statement titled “MAN responds to questions on expectations from the new administration”, which was signed by the Director-General of the association, Segun Ajayi-Kadir, said that there was also the evident inadequacy of needed infrastructure and the myriad of macroeconomic challenges that have constituted binding constraints to the performance of the economy.
The association noted that the need to address the mounting challenges confronting the manufacturing sector had become more imperative given the drop in the Manufacturing CEOs Confidence Index, a quarterly survey of MAN to gauge the pulse of the operators and trends in the manufacturing sector.
“Even though MAN is an advocacy group and apolitical, we have expectations from the incoming government and look forward to working with them to accelerate the economic development of Nigeria, particularly the manufacturing sector.
“Let us take a look at the key economic indicators: The inflation rate is 21.82 per cent and the Naira exchanges for the Dollar officially at N460 and on the streets, which is by far the most patronized by economic actors is about N750. On interest rate, the MPR is 17.5 per cent, while the lending rate is 27.63 per cent, to most manufacturers, the latter is the norm,” it averred.
“We have unemployment, which is prevalent amongst the youth at 33.3 per cent, even as the GDP annual growth rate is about 3.52 per cent. Today, government debt to GDP ratio is 37 per cent from 34.5 per cent last year.”
Meanwhile, MAN has identified excessive regulation as well as high cost of production among the biggest factors that hindered the growth of the manufacturing industry in 2022.
This was the position of manufacturing CEOs according to a survey administered by the association.
The survey, which was made available to The PUNCH, sampled the opinions of more than 400 manufacturing CEOs in Nigeria.
The manufacturers said it was important that the identified challenges of the sector by manufacturers themselves should be quickly taken up by the government with priority attention.
Other core challenges identified by the manufacturers in the survey included low patronage/poor sales due to low purchasing power, high inventory of unsold manufactured goods, high cost of transportation/high cost of logistics/increase in cost of distribution, insecurity, poor road infrastructure, among others.
On the lingering forex scarcity, the manufacturers urged the government to prioritise forex intervention through the official market, particularly to support the raw materials and machine needs of industries.
They also asked the government to improve forex allocation to the industrial sector and enhance the capacity of designated banks to efficiently process application of forex by manufacturers.
To help reduce the burden of overregulation, particularly through taxation, they called on the regulatory agencies to publish the list of approved of the harmonised taxes and levies for the manufacturing sector by the Tax Joint Board.
According to a special focus report prepared by MAN, inadequacy and high cost of energy have been identified by manufacturers as the core challenges of manufacturing operations in the country.
The report noted that Nigeria had over 200 million people and a huge productive sector that were energy-dependent but electricity distributed in the country has been a mere 4000MW.
It read in part, “This explains the reason in the various Manufacturers CEO Confidence Index reports, poor supply of electricity has been continuously ranked among the top challenges of the sector. In addition, the energy challenges are variously represented as the cause for the poor competitiveness of the economy and manufacturing sector.
“Nigeria is naturally endowed with hydro-carbon with oil reserves of about 37 billion barrels in 2021 and gas reserves of about 5.8 trillion cubic metres. Unfortunately, we have failed to exploit these resources to the benefit of the economy.”