By Merit Ibe
The Manufacturers Association of Nigeria (MAN) has hinted that despite inward looking foreign exchange stance of the Central Bank of Nigeria (CBN), over 40 percent of manufacturers are still unable to access forex, to enable them import vital raw materials, machines and spares that are not available locally.
The President of MAN, Mansur Ahmed, who made the disclosure at the Annual General Meeting of the association, noted that with the massive drop in global oil prices and the ravaging COVID -19 pandemic, which translated to reduction in forex inflow into the country, the Chief Executive Officers (CEOs) and manufacturers have confirmed that it was difficult to source forex.
Applauding the stance of the CBN which he said has positively impacted the nation’s forex reserve, deepened the backward integration efforts of the manufacturing sector, he lamented undue restriction of manufacturers’ access to forex, which has created trust issues with overseas suppliers and reduced manufacturing output through prolonged stockout and factory shutdown.
He appealed to the CBN to also grant manufacturers increased access to forex at pre COVID-19 rate to enable them meet with production demand and supply.
Making reference to the Manufacturers CEOs Confidence Index (MCCI) meant to gauge perception of CEOs of member companies on the economy and the state of the manufacturing sector which averaged 51.2 points in 2019, an indication of a meagre 1.2 points above the 50-points performance, he noted it signified that the manufacturing sector was still struggling, in need of a comprehensive and integrated support system from the government.
“Clearly, the sector is still in need of a comprehensive and concerted support system from the government, as observed trend shows that the sector is struggling due to diverse familiar challenges.”
He reeled out some other challenges that have bedeviled the sector in the year under review, to include but not limited to the inventory of unsold finished manufactured products which has risen to an all-time high of about N402.4 billion confirming the reality that the disposable income of the consumers has been grossly eroded;
“Manufacturers are still inundated with numerous, oftentimes duplication of demands from the tiers of government in form of taxes, levies, fees, permits, etc;
“Manufacturing companies are continually overwhelmed with multiple regulations from different regulatory agencies and excessive drive for revenue by government agencies;.
Dearth of trade facilitation infrastructure, poor access to the nation at sea ports and longer turnaround time for clearance of cargo collectively stifle the smooth operations of manufacturing concerns.”
He added that inadequate electricity supply and incessant increases in tariffs without commensurate improvement in generation, transmission and distribution remain key challenges.
Expressing displeasure that the manufacturing sector spent over N67.38billion on self-generated electricity with energy cost accounting for over 38 per cent of production cost in 2019, Ahmed emphasised that as customary, the association had made series of submissions to government on these challenges accompanied with suggestions on how to resolve them, noting that it was gratifying to note that government has given due attention to some of these challenges.
Appreciating the government for its extraordinary initiatives in the year under review, he noted that the border closure which came in response to the sectors’ advocacy efforts towards curbing the menace of smuggling of prohibited items, fake products and counterfeiting of made in Nigeria, no doubt favoured some members and impacted some negatively. He however, requested that government should review the decision and introduce sustainable measures.
Going forward, the MAN boss implored the Federal Government to reduce the financial pressure on companies occasioned by COVID-19 by compensating manufacturing concerns that are forced to shut down with 60 per cent of employees salaries for at least three months to prevent laying offs of employees and massive unemployment.
Support manufacturing concerns with existing loan facilities by reviewing the terms, especially reducing interest rates to five percent with two years moratorium.
For manufacturers that are investing in order to scale up production should be granted loans at five per cent interest rate for a period of five to seven years. These will no doubt improve liquidity and ramp up productivity in the manufacturing sector in a manner that will cover up for obvious losses due to COVID-19.
He also pleaded that the government should prevail on the CBN to extend its COVID-19 stimulus packages to manufacturers not covered by existing CBN initiatives.
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