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By Merit Ibe
The Manufacturers Association of Nigeria (MAN) has described the alarming surge in inflationary trends in the country as a threat to the envisaged manufacturing and industrial sectors’s growth.
The association also complained that the unstable naira- dollar exchange rate has made it difficult for medium to -long term planning, no matter how short the transaction period.
Director-General of MAN, Segun Ajayi-Kadir, who commented on the trend said it was adversely affecting the operations of the manufacturing sector, pointing out that elevated inflation served as a significant sign of underlying macroeconomic weaknesses the authority has neglected.
It is important to note that addressing inflation is a complex and long-term endeavor that requires a coordinated effort from various stakeholders, including the government, central bank, private sector.
“It appears evident that the continuing inflationary pressure experienced in the country is attributable to the fallout of recent government policy and measures, including removal of fuel subsidy and the unification of exchange rates. Additionally, concerns about increasing energy costs and widespread insecurity in food-producing regions are exacerbating the inflationary pressures.
“Furthermore, the ongoing rise in inflation erodes savings and incomes, prompting the CBN to raise the country’s benchmark interest rate to its highest level in nearly twenty years. The apex bank’s effort was aimed at arresting the soaring inflation and defending the naira which has continued to drop in value both at the official and parallel markets.
The increase, he revealed, has led to a rise in the cost of production, higher costs of raw materials, labour and other production inputs and reduced profit margin leaving manufacturers to pass on higher costs to consumers in the form of higher prices.
Ajayi-Kadir noted that the resulting weak consumer spending would worsen the high stock of inventory that the manufacturing sector was already confronted with.
“The manufacturing sector has been struggling from the combined effect of COVID-19, deteriorating infrastructure, high regulatory compliance cost and tax obligations.
“So, rising and high inflation, perennially high interest rates and scarce/high rate of forex has compounded the downturn in the sector.
He explained that the concerted efforts of government to recover the economy would have to address the challenges, advising government to intensify efforts at stabilising the consumer price level through growth in agricultural output and diversification of the Nigerian economy to guarantee stable prices in both agricultural and manufactured goods.
Ajayi-Kadir also pushed for the resuscitation of moribund industries in the country to boost output, thereby reducing prices.
“Government should also partner the MAN to accelerate the success in the resource based industrialisation initiative of the association, assist manufacturing productivity with credit at competitive price. “This could be in the form of concessions and enhancing existing special credit window.
