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By Merit Ibe
Manufacturers in Nigeria have urged the Federal Government to rise up to the occasion of saving the sector from total collapse as that would be disastrous for the already struggling economy. The operators under the aegis of Manufacturers Association of Nigeria (MAN), who made the call following the hike in price of diesel, noted that manufacturers in the country are in the worst of times with a projected cost of N1,000/litre amid the trend of astronomical increase in the cost of diesel presently at N720/litre.
The manufacturers, who sought Federal Government’s intervention in the critical real sector, asserted that the hike could, more or less be the proverbial last straw for many struggling operators who have long been burdened with high energy cost.
Chairman, Manufacturers Association of Nigeria (MAN), Imo/Abia, Dr. Jude Eluma, noted that without any doubt, more MSMEs would pack up, as many are closing shop at the moment, due to poor power supply.
“Manufacturers depend 70 percent on diesel powered generators and with the cost of diesel now up in the sky, most factories might close up, including mine.
“Government should rise up to the occasion of saving manufacturing as a critical real sector in the economy.”
On subsidy removal, Eluma said for as long as refineries are left to decay without concrete efforts to bring them on stream and petroleum products are being imported with complex combination of corruption and foreign exchange variation, it would be fatal to remove subsidy. “The politics of subsidy removal and policy summersaults in government midwife scarcity.”
He advised government to be steady and decisive in its policies to enhance smooth flow of activities.
For his part, Chairman, MAN, Apapa branch, Frank Onyebu, explained that the astronomical hike in the price of diesel is a major cause of concern for the manufacturing sector.
“This problem would not be very critical if we have stable power supplies to industries. Unfortunately, the power situation is getting worse rather than getting better. This is made worse by the advent of the African Continental Free Trade Area Agreement (AfCFTA), which is already at the implementation stage.
“The obvious implication is the stark reality of the uncompetitiveness of Nigerian manufacturers.”
Onyebu noted that the only way manufacturers could survive this diesel price regime is for a major improvement in electric power supply to industries. He emphasised the need for a deliberate government policy to ensure that manufacturers receive adequate/stable supply of electricity to be able to compete with manufacturers from countries with more stable power supplies.
He remarked that manufacturers could also turn to gas, which is a greener/cheaper source of energy than the current regime of above N700 per litre of diesel.
He however, noted that the option comes with a very high initial investment which many struggling manufacturers cannot afford at this time, calling for government’s intervention with some form of funding for this option to succeed.
Onyebu said subsidy was not sustainable and that It would have to be removed at some time. “The trillion Naira question is when?”
“The ‘when’ would be determined by how soon government wakes up to its responsibilities towards the Nigerian state. If we had stable power supply and a functional mass transit system for instance, people would not be much bothered by increases in the cost of petroleum products.”
“Being a major employer of labour, the manufacturing sector stimulates economic growth by way of tax contributions, value additions and savings in foreign exchange by manufacturing products which would otherwise be imported.
Chairman, MAN, Oyo, Osun, Ekiti and Ondo branches, Lanre Popoola, lamented that it was getting extremely difficult to produce. “ I don’t know how we are going to cope because 70 per cent of industries are running on diesel, there is no light.
“There is no power supply, we are having 30 per cent of what it used to be, whereas the disposable income of people is not increasing and the cost of products is going up.”
Popoola called for quick intervention to support the production of goods.
