The Manufacturers Association of Nigeria, MAN, is seeking a summit to engage the government at the highest Ministerial Level to discuss the fate of the manufacturing Sector in Nigeria.
MAN has always been a key partner to Government and remains willing, available and ready to support the Government in formulating and executing its policies.
Though the manufacturing sector is passing through hard and challenging times, setting a comprehensive agenda for the sector’s transformation will enhance its competitiveness and unlock its full potential.
The President, Manufacturers Association of Nigeria, MAN, Francis Meshioye stated the above at the 3rd Adeola Odutola Lecture and Presidential Luncheon of the Manufacturers Association of Nigeria for the 51st Annual General Meeting of the Association held in Lagos.
The economy, and in particularly, the manufacturing sector according to him has been the worst hit by the combination of external and domestic challenges. “Starting from 2015/2016, the Nigerian economy expressed a recession triggered by the global financial crisis that was due to the sharp decline in the oil market. Just as we were beginning to recover from the recession, a global health pandemic emerged, disrupted economic activities and global supply chains, posing a significant threat to industries”, he said.
“Our Association has taken due notice of your policy pronouncements, particularly within your first 100 days in office. Some bold policy actions, including the removal of fuel subsidy and introduction of managed float of the exchange rate, have elicited the commendation of most economic actors and stakeholders. The fallout of those measures have equally thrown up some policy imperatives that should be addressed in order for the economy to rebound and for the citizenry to appreciate and reap the long-term benefits of the various reform measures”, he added.
“We seek your intervention to facilitate an engagement between the Central Bank of Nigeria and MAN to discuss the recent lifting of the restriction on access to foreign exchange on 43 items. We are confident that the outcomes of conversation will allow the CBN to achieve its objective of reducing pressure on the parallel market and effective control of the foreign exchange administration. At the same time, it will ensure that domestic production is not overrun by influx of imported alternative and our raw materials that are not locally available could be procured using the official market”, he stressed.
MAN according to him has been at the forefront of promoting and advancing the industrial development of our nation. In the course of its journey, our Association has engaged in impactful collaborations and continuous engagements with the Nigerian government and other relevant stakeholders, both within and outside the country.
“MAN has consistently provided a platform for manufacturers to come together to share their expertise and resources, in order to expand the frontier of our economic development and foster cross-border value chain to achieve sustainable economic growth and development”, noted the President.
Meshioye
He however listed the challenges hampering the operation of Manufacturing Sector to include: Multiple Taxation, High Cost of Borrowing, Infrastructural Inadequacy, Low Local Content Development and Patronage of made-in-Nigeria Products, Poor Sectoral integration of the manufacturing sector and Shortage of Foreign Exchange
Multiple Taxation: An average member of MAN is subjected to no less than 30 different forms of taxes, fees, and levies. The consequences of the incidence of multiple taxation are immense and include the rising cost-of-doing business and rapid divestment in the manufacturing sector. These issues combine to depress demand; worsen job losses and increase the incidence of poverty and low revenue generation from the sector.
We are confident that the Presidential Committee on Fiscal Policy and Tax Reform will adequately address the matter. Our Director General represents the Organized Private Sector on the Committee and we look forward to working jointly with the representatives of your Ministry on the Committee to make the case for fair taxation of the manufacturing sector.
High Cost of Borrowing: Another constraining factor in the manufacturing sector is the challenge of high interest rate. The average bank lending rate for manufacturers is 26% per annum. We acknowledge the 9% interest rate on the N75 billion loan facility for a minimum of 75 companies that was recently promised by Mr. President. While commending His Excellency for this initiative, we are hopeful that it could even come at a lower rate and MAN would be given the opportunity to work with government to determine deserving sectors, agree the disbursement modalities and join in the evaluation and monitoring of its effectiveness. We believe that this inclusive approach will guarantee more success and create the basis for granting a much bigger emergency fund for the beleaguered manufacturing sector in the near future.
Infrastructural Inadequacy: Poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities are serious impediments to the growth of the manufacturing sector. We look forward to government to improve investment and undertake effective reforms to guarantee reliable power supply; good road networks; and an efficient port system.
Low Local Content Development and Patronage of made-in-Nigeria Products: Nigeria has a low local content adoption and patronage of made in Nigeria products. We urge His Excellency to ensure effective enforcement of local content and patronage regulations. This can be achieved by strict enforcement of local content laws, incentivizing local sourcing of raw materials, and innovation in the manufacturing sector. Also, the public sector at all levels should, as a matter of national importance, step up their compliance with existing government directive on patronage of made-in-Nigeria products, including Executive Orders 003 and 005
Poor Sectoral integration of the manufacturing sector: The manufacturing sector is one of the sectors of the economy with wide sectoral interlinkages. However, the low level of development of auxiliary sectors is disentangling the manufacturing sector from the rest of the sectors. This is more so in agriculture, iron and steel and mining sectors. This has resulted in a limited supply of raw materials and other input for the manufacturing sector. Therefore, it is essential to encourage backward integration and sectoral linkages to promote a more sustainable manufacturing sector in Nigeria.
Shortage of Foreign Exchange: MAN appreciates the new administration’s policy on exchange rate unification as part of the measures to address the forex crisis. However, the problem is only half solved as forex shortages and high rate persist in the market. Addressing supply inadequacy is critical to a resilient manufacturing sector and we urge government to intensify its current efforts in this regard.
