…N402.4B Manufactured Goods Unsold
Irregular electricity supply from the nations weak and feeble grid system has cost manufacturers in the country a whopping sum of N67.38 billion from self generated electricity.
This revelation was made during the media briefing heralding the 2019 Annual General Meeting, AGM, of the Manufacturers Association of Nigeria, MAN, in Lagos on Thursday.
Mansur Ahmed, president of MAN, said, “The manufacturing sector spent over N67.38b on self-generated electricity with energy cost accounting for over 38 per cent of production cost in 2019; and genuine exporters are still being owed huge sums of money as backlog of unpaid outstanding from the Export Expansion Grant scheme.”
Ahmed, also revealed that inventory of unsold finished manufactured products 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.
He said, the MAN is aware of the unprecedented trauma that COVID-19 has unleashed on human lives, businesses, health systems, institutions and economies around the world.
The president however, appreciated members of MAN for their support to government when it was most needed to provide palliative as a way to cushion hardship experienced by Nigerians and to contain the spread of COVID-19.
“From our record, manufacturers donated about N8 billion in cash and N300 million naira worth of palliative materials to both Federal and States Governments. We are sincerely grateful to our frontline health workers and other service providers for their commitments, sacrifice and service to humanity.”
Meanwhile, Ahmed said the Association has made series of submissions to Government on these challenges accompanied with suggestions on how to resolve them and it is gratifying to note that government has given due attention to some of these challenges.
For manufacturers to remain in business, the president urged the reduction of 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.
Government should also support manufacturing concerns with existing loan facilities by reviewing the terms, especially reducing interest rates to 5 per cent with 2years moratorium.
“For manufacturers that are investing in order to scale up production should be granted loans at 5% interest rate for a period of 5 to 7 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 noted.
The Association also urged government to prevail on the Central Bank of Nigeria (CBN) to extend its COVID-19 Stimulus packages to manufacturers not covered by existing CBN initiatives.
“The CBN should also grant manufacturers increased access to Foreign Exchange at pre COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally.
“Introduce fiscal measures by waiving import duties on Active Pharmaceutical Ingredients (APIs), other essential products and food related raw materials for one-year effective April 2020;
Extend timelines for filing and paying taxes (including excise duty with a provision that it should be based on sales and not production) by 6 months after the economy returns to normalcy.”
They also asked for the reversal of the Value Added Tax Rate back to the pre 2020 Finance Act rate and reduce the Personal Income Tax to a flat rate of 10 per cent for one-year effective April 2020. This will improve the disposable income of Nigerian workers, stimulate consumption, promote an upsurge in demand and increase production output.
They also want all Regulatory Agencies, especially Standards Organizations of Nigeria (SON), National Agency for Food and Drugs Administration & Control (NAFDAC) to reduce their respective administrative charges (Pre-COVID-19 rates) payable by manufacturing concerns by 50 per cent while the Nigeria Customs Service, the Nigerian Ports Authority and other related agencies of Government should treat all requests from Manufacturers expeditiously with great sense of responsibility and understanding of the prevailing situation.
“As a matter of urgency, direct that cargoes containing manufacturing raw materials are cleared swiftly and ensure compliance with additional free days from the terminal and shipping lines to clear the containers to avoid demurrages as already announced.
“Grant manufacturers waivers from all demurrages payable between February and July 2020, especially those occasioned by the lockdown directives of Government and others associated with COVID-19 pandemic.” he appealed.