By Merit Ibe
Manufacturers have urged the Federal Government to put in place policy initiatives that can ameliorate the hardship caused by rising price of petrol following subsidy removal.
They have therefore called on the government to address constraints that have hampered the growth of the manufacturing sector, adding that it was the best palliative it can offer Nigerians.
Director General of MAN, Segun Ajayi-Kadir, who lamented the situation of the sector said the knock-on effect of the increase in price of petrol and limited profitability of the sector could be assuaged by voiding the planned increase in the electricity tariff, which is bound to have a damaging and compounding effect on the increase in price of petrol.
“I would say that the best route to cushion the downside effects of the various policy reforms is to remove the binding constraints that have limited the operations of the manufacturing sector. This will allow for expansion and improved capacity utilisation, more jobs and improved performance of the values chains.”
He pointed out that the second increase within two months as similar increases in the past has led to escalating cost of transportation and trickle down effect on other goods and services.
“Most Nigerians buy petrol to fuel their generators because of the gross inadequacy of power supply. If the electricity tariff is increased, in the midst of rising cost of petrol and expensive diesel, you are effectively tightening the rope around the livelihood of the average Nigerian and accentuating the lackluster performance of the manufacturing sector.”
He added that the manufacturing sector had been battered by many familiar challenges that have plummeted the number of industries and converted industrial hubs to warehouses of imported goods and event centres.
For his part, President, MAN, Francis Meshioye, said the unpredictability of fuel price hikes would take a serious toll on manufacturers who already had to readjust budgets to factor in the added costs caused by the removal of fuel subsidy.
He said the increase in fuel price had already raised the cost of logistics, which would be compounded by the latest hike.
The MAN president also stated that top on the list of the pain points of the sector was high operating cost caused by the twin problem of inadequate electricity supply and the high cost of alternative energy sources.
He noted that given the trend, there were fears among manufacturers that this might not be the final increase and urged the government to develop a culture of engaging key stakeholders before decisions with far-reaching consequences such as this, were taken.
“When fuel subsidy was removed, most people were of the opinion that the change that would occur was going to be a one-off change. If there was going to be any change, we expected little, not a skyrocketing one.
“The signal this gives to the business community is that – are we sure this is the final increase? Some of our members have tried to make some readjustments. This will make nonsense of the budget that we have done. We have said it several times, when it is difficult for you to operate, what happens next?
“If people are unable to come to work and you have to increase prices for consumers, what will happen? And where is the purchasing capability of the consumer to really purchase?” Meshioye stated.