By Joy Obakeye
The Manufacturers Association of Nigeria (MAN) has urged the in-coming administration to direct the Central Bank of Nigeria (CBN) to ensure 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.
MAN, therefore, said it expects the incoming administration, when sworn in, to address the inadequacy of infrastructure and the myriad of macroeconomic challenges constraining the performance of the economy.
MAN Director-General Segun Ajayi-Kadir in a statement said this was against the backdrop of a reduction in the Manufacturers CEO Confidence Index (MCCI) in the last quarter of last year.
The MCCI is MAN’s quarterly survey to gauge the pulse of operators and trends in the manufacturing sector. It mirrors their response to the movement in the macro economy and government policies using primary data mined through a direct survey of 400 CEOs.
Ajayi-Kadir said in the latest survey for the fourth quarter of last year, the aggregate index score declined from 55.4 points in Q3 2022 to 55 in Q4 2022, indicating that CEOs of manufacturing industries have less confidence in the economy.
“I think that there should be a realisation that the economy is in a parlous state and needs a quick rejig. We need to reset our priorities and stop the haemorrhage,” Ajayi-Kadir said, pointing out that key economic indicators have also remained unfavourable.
He stated, for instance, 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 patronised by economic actors, the rate is about N750.
“On interest rate, the Monetary Policy Rate (MPR) is 17.5 per cent, while the lending rate is 27.63 per cent. To most manufacturers, the latter is the norm. We have unemployment, which is prevalent among the youth at 33.3 per cent, even as the Gross Domestic Product (GDP) yearly growth rate is about 3.52 per cent.
Today, the government debt to Gross Domestic Product (GDP) ratio is 37 per cent from 34.5 per cent last year. The latest addition that is profoundly disrupting the economy is the redesign of the national currency and the attendant scarcity, Ajayi-Kadir added.
He said that for the inexplicable poor management of the transition process, the national currency redesign policy was an excellent monetary control measure by the Central Bank of Nigeria (CBN).
“So, if the problem lingers, the new administration should swiftly address it, without throwing away the baby with the bath water,” the MAN DG said.
Ajayi-Kadir also said against the background of the evident inadequacy of needed infrastructure and the myriad macroeconomic challenges that have constituted binding constraints to the performance of the economy, the new government should not be under any illusion about the need to hit the ground running and stop the drift.
According to him, there are low-hanging fruits, as well as the long-term perspective for stabilizing and growing the economy hence the need for the President, when sworn in, to set specific deliverables to be accomplished within the first 100 days in office.
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Ajayi-Kadir said a must-do list for the incoming administration within the first 100 days after the swearing-in should be to permanently resolve the lingering difficulties with the currency transition if it has not been completely addressed by the outgoing government.
“The national currency redesign policy and the attendant scarcity of the naira have resulted in a more than 25 per cent dip in sales of manufactured products,” he lamented.
The MAN boss further urged the incoming president to direct the 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.
He also called on the incoming administration to take immediate and time-bound steps to achieve the unification of the foreign exchange windows.
Manufacturers also want the Nigerian Electricity Regulatory Commission (NERC) to be directed to admit all qualified applicant companies into the Eligible Customer Scheme to allow them access to power as stipulated in the Electric Power Sector Reform Act 2005.
Similarly, MAN urged the incoming administration to direct all relevant agencies of government to ensure that the electronic call-up system at ports aimed at redressing the congestion works without fail.
The Association also called on the incoming government to ensure that the Finance Bill 2022, if not assented to before the transition, includes the critical inputs of the organized private sector.
“In particular, jettison 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).
Additionally, ensure that the imposition of the 0.5 per cent levy on eligible imports from third countries is limited to goods that we can produce locally and quite importantly, exclude raw materials that are not locally available,” MAN said.
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