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Stories by Merit Ibe [email protected]
As inflation and foreign exchange scarcity batter the Nigerian economy, local manufacturers have continued to press on the Federal Government to give urgent attention to the manufacturing industry, which in turn will stimulate economic development and global competitiveness.
The operators bemoan the poor state of the manufacturing sector, insisting that there is no developed or developing country that does not give priority attention to its manufacturing sector as it remains the fulcrum on which economic growth revolves.
According to Francis Meshioye, President, Manufacturers Association of Nigeria (MAN), “Our country’s economy is in a dire straits and our policymakers, more than ever before, need to be intentional about growing the manufacturing sector.
“There is no gainsaying the fact that manufacturing is pivotal to galvanising and sustaining the economic growth and development of Nigeria. The government needs to come to the realisation that a win for the manufacturing sector is a win for the economy and by extension a better life for the citizenry.”
To this end, Meshioye harped on the need for the government and the private sector to work in tandem to revamp the ailing manufacturing sector, especially at this time of raging economic tempest.
At the 8th presidential media luncheon and award held recently in Lagos, Meshioye noted that there was an urgent need to mobilize the country’s local resources and take deliberate steps to overcome the constraints that confront the productive sector. He said this has to be achieved through frank conversations, effective collaboration and bold decisions that radically depart from the old norm. To him, the government needs to collaborate with the private sector especially at this delicate time, by exploring home-grown policy initiatives that will address peculiar challenges.
The MAN boss added that the nation’s economic recovery is highly dependent on the deployment of policy stimulus supported with a synthesis of domestic growth, export focused and offensive trade strategies.
These, he said, would promote resilience, steady growth and ensure that the sector gains meaningful traction going forward.
Meshioye further cautioned the government against taking inconsiderate policies that lack adequate inputs of key players that would be affected.
He also spoke on the ban on single-use plastics, styrofoam packs and alcoholic beverages in pet bottles and sachets below 200ml, noting that government does not give due consideration to the economic and social impact of some of its unpopular decisions.
“Government and its agencies should deliberately abstain from taking harmful and inconsiderate policies that lack adequate inputs of key players that would be affected. Permit me to make reference to two of such instances.
“The negative impact of these policies on the manufacturing industries is huge and the number of workers whose jobs are on the line cannot be over-emphasised.”
For the Director General of MAN, Segun Ajayi-Kadir, the government should lift the ban as thousands of jobs are at risk.
Ajayi-Kadir noted that the ban will rob the government of the much-needed revenue, deny adults the right to more affordable products and open the market to more illicit drinks that cannot be controlled.
He advised regulatory agencies to be more innovative and support industries to be able to transit to more environmentally-friendly packages and products.
“Some members have the capacity to recycle styrofoam.
If government is concerned about the environment, they should not profit from it but assist those industries and enable them to have a fair transition without killing their businesses.
“Each time government bans or stops the production of some certain products, families suffer, government revenue is affected and it has social impact.” Urging government to consider these points, he said as a nation, heading towards industrialisation, “we have to be keen about arriving at a win-win situation for the economy, the citizens and the government.
On import duty, the DG appealed to the government to be deliberate in fixing exchange rate on raw materials, spares and machinery imported into the country, to ease the pain of manufacturers who import.
“President Bola Tinubu’s on his first day promises to promote domestic manufacturing, this cannot be achieved by killing domestic producers.”
He decried that there was palpable anxiety in the society, with the NLC protests and others, saying all hands must be on deck to intentionally lower the cost of living.
“Government should leverage the potential of manufacturers to improve the economy.” To improve the manufacturing sector in 2024, MAN recommended that government should do the following;
Fuel subsidy
Expend cost saving from fuel subsidy to deploy a bouquet of production-focused policies, backed with more structural measures to combat the peculiar inflationary pressures from insecurity, energy and transport cost.
Power sector
Overhaul the power sector and incentivise investments in renewables to boost electricity generation and promote energy-cost efficiency.
Patronage of local products
The government should lead by example and give priority to patronage of made-in-Nigeria products in all its purchases and for all government contracts and projects; upscale patronage of made-in-Nigeria products by deliberately reducing the excessive reliance of the country on imported products and enforce the implementation of Executive Order 003 in the same breath for their ministries, departments and agencies.
Local sourcing
Government should encourage local sourcing of raw materials through comprehensive and integrated incentives to address the challenges of low productivity and imported inflation.
They also want the government to utilize the 2024 budget to improve infrastructural development, especially in strategic industrial hubs to reduce operational and logistics cost and generally promote competitiveness.
Energy security
Manufacturers want the government to encourage sub-national governments and private investors to leverage the opportunities provided by the Electricity Act 2023 to improve energy security in Nigeria.
Forex
Maintain all measures to boost the level of liquidity and degree of transparency in the official forex window even as the backlog of $7 billion forex obligations is being cleared.
Prioritize forex and credit allocation to the manufacturers and reduce the number of BDCs into large and well-established operators to curb their excesses and untowards operations through effective management and supervision.
Encourage inflow of foreign direct investment into pre-determined and domestic production-enhancing businesses. Should intentionally guide diaspora remittances into non-oil sectors, especially manufacturing to aid forex inflows and curb rising inflation.
Exchange rate
Manage the floating exchange rate system within an acceptable lower and upper bound, pending the actualization of a net-exporting economy aspirations.
The CBN should intensify its collaboration with the fiscal authority; Federal Ministry of Finance and by extension the Tariff Technical Committee (TTC) for proper policy alignment on the appropriate HS Codes for items that Nigeria has sufficient capacity to discourage importation and save scarce foreign exchange.
The apex bank should allow forex access for importation of vital industrial inputs that are currently not available locally and subject them to backward integration policy that gives priority to a predictable sunset clause. MAN offers to be part of a monitoring and evaluation team to ensure that government gets value for incentives offered to achieve this objective.
Credit
The CBN to develop a sustainable framework to channel credit interventions into the manufacturing sector, outside the direct intervention. Additionally, it should mobilize commercial banks to intentionally provide long term single digit interest loans to the manufacturing sector to fast-track the actualization of a $1 trillion dollar economy.
