YEMISI IZUORA
The Manufacturers Association of Nigeria, MAN, is more expectant that a drastic policy turnaround by the incoming administration is germane to galvanize the manufacturing sector and boost productivity which has seen a measure of decline in the fourth quarter of 2022.
Majority of operators in the sector from their expression have lost confidence in the economy.
Consequently, the Association’s expectations, as manufacturers, are coming against the backdrop of a reduction in the Manufacturers CEO Confidence Index (MCCI) in the last quarter of 2022.
Oriental News Nigeria, reports that the MCCI is a quarterly survey of MAN to gauge the pulse of the operators and trends in the manufacturing sector which also mirrors their response to the movement in the macro economy and government policies using primary data that is mined through a direct survey of 400 CEOs.
The MAN has also observed diffusing factors like current business conditions and business conditions for the next three months; current employment conditions and employment conditions for the next three months; and current production levels and production levels for the next three months. In the latest survey for the fourth quarter of 2022, the aggregate index score declined from 55.4 points in Q3 2022 to 55.0 in Q4 2022.
This thus shows that CEOs of manufacturing industries have less confidence in the economy.
Segun Ajayi-Kadir, Director General, DG, of MAN, speaks loudly on the Association’s expectations, especially now that the first phase of the elections has come and gone.
To start with, Ajayi-Kadir, while presenting the Association’s demands, expected that the transition should take place in a peaceful atmosphere and all the contestations should follow established and legal processes.
“We can then talk of a smooth and effective transfer of governance and handover to the new administration. Effective in terms of ensuring that the transition committee works well with the incoming team and the new administration is able to hit the ground running.
“So, we should expect that there is minimal downtime in governance. Seeing that the new administration settles down and makes the needed appointments in good time and selecting the right people.”
Discussing, the key demand issues, he observed that the overarching priorities are security and the economy as the Association’s area of interest is the economy.
First he said the authorities should realize that the economy is in a parlous state and needs a quick rejig and there is urgent need for the country to reset her priorities and stop the hemorrhage.
Giving a synopsis of the declining economic performance, the Director General, noted that the inflation rate is 21.82 per cent and the Naira exchanges for the Dollar officially at N460 and on the streets, which is by far the most patronized by economic actors is about N750.
On interest rate, the MPR is 17.5 per cent he said, while the lending rate is 27.63 per cent to most manufacturers, the latter is the norm.
According to him, “We have unemployment, which is prevalent amongst the youth at 33.3%, even as the GDP annual growth rate is about 3.52%. Today, government debt to GDP ratio is 37% from 34.5% last year.
“The latest addition that is disrupting the economy in a profound manner is the redesign of the national currency and the attendant scarcity, an otherwise excellent monetary control measure by the CBN, but for the inexplicable poor management of the transition process. So, if the problem lingers, the new administration should swiftly address it, without throwing away the baby with the bath water.
There is also the evident inadequacy of needed infrastructure and the myriad of macroeconomic challenges that has constituted binding constraints to the performance of the economy”.
With this background, the DG, expressed the hope that the new government should not be under any illusion about the need to stop the drift and hit the ground
There are low-hanging fruits, there is also the long-term perspective for stabilizing and growing the economy.
He suggested that the President, when sworn in, should set specific deliverables to be accomplished within the first 100 days in office.
What To Do To Rejig The System
The MAN, after carrying out a post mortem analysis of the economy unanimously demanded the new administration should permanently resolve the lingering difficulties with the currency transition if it has not been completely addressed by the outgoing government, complaining that this has resulted in a more than 25 per cent dip in sales of manufactured products.
The new government should urgently direct the Central Bank of Nigeria, CBN and ensure that it complies with the prioritization of foreign exchange to the productive sector, particularly to manufacturers to import raw materials, spares, and machinery that are not locally available. And taking immediate and time-bound steps to achieve the unification of the foreign exchange windows.
On the energy side, Ajayi-Kadir,expects that the Nigeria Electricity Regulatory Commission,NERC, be directed to admit all qualified applicant companies into the Eligible Customer Scheme in order to allow them access to power as stipulated in the Electric Power Sector Reform Act 2005, while all relevant agencies of government should be asked to ensure that the electronic call-up system at ports aimed at redressing the congestion works without fail.
Again the MAN, said the Government should ensure that the Finance Bill 2022, if not assented to before the transition, includes the critical inputs of the organized private sector.
The key issue raised by the Association is the jettisoning of the highly objectionable removal of the 10 per cent investment allowance on the acquisition of plants & machinery (in the Company Income-tax Act, section 32) as well as to ensure that the imposition of the 0.5 per cent levy on eligible imports from third countries is limited to goods that we have capacity to produce locally and quite importantly, exclude raw materials that are not locally available.
The group also demanded that input of the organized private sector on the CEMA BILL should also be taken on board before the amendment bill is signed into law.
In addition, the new Government should take a definite stand by ordering the removal of fuel subsidy. The decision should be outright and immediate steps should be taken to commence removal, with a special policy initiative to address the revival of closed and distressed industries, particularly in the northeast where 60 per cent of its member companies have closed.
There shall also be a special policy initiative to leverage diaspora expertise and investment to address evident gaps and help to boost the performance of the economy while all ministries, departments, and agencies of government should be directed to unfailingly comply with Executive Order 003 on the patronage of made-in-Nigeria products.
In this regard, the MAN, expects that there should be a strict application of the margin of preference, effective monitoring and periodic evaluation of compliance,` and appropriate sanctions meted out to MDAs acting in breach of the executive order.
The MAN is also expecting a special policy initiative to de-risk manufacturing and unleash adequate funding for the sector through effective funding of special lending windows.
The Association is desirous to see all recommendations implemented by the new administration and believes that if the prosperity of Nigeria is paramount, then the productive sector should be given maximum priority for the general good of all in terms of wealth and job creation for the Nation.
