MAN Bewails High Cost of Diesel Killing Local Manufacturing

• Urges Govt to allow operators in manufacturing, aviation industry to import diesel, aviation fuel directly

The Manufacturers Association of Nigeria (MAN) has bewailed over how the high cost of diesel is killing local manufacturing and called on the Federal Government to provide an integrated support system to reduce the impact of increasing cost of diesel on manufacturing.

Director-General, MAN, Mr Segun Ajayi-Kadir, made the call in a statement issued in Lagos and made available to Gentechnews.

The Manufacturers Association of Nigeria (MAN) is the voice of manufacturers in Nigeria and the leading Business Membership Organization in West Africa and the African Continent. The Association represents the interests of over 3,000 manufacturers (small; medium; large and multinational industries) spread across 10 sectors, 76 sub-sectors and 16 industrial zones and currently leading the Federation of West African Manufacturers Association and Pan African Manufacturers Association.

The manufacturing sector, which dominates export trade in the West African sub-region, employs more than five million workers, directly and indirectly and contributes 8.46 per cent to the nation’s Gross Domestic Product (GDP).

Ajayi-Kadir stated that the call was imperative during times of crisis to enhance the performance of the sector through a pro-manufacturing policy that would encourage scale-up and lower unit cost of production.

He lamented that over the years, the manufacturing sector had been battered by many familiar challenges that had plummeted the number of industries and converted industrial hubs to warehouses of imported goods and event centres.

The MAN DG stated that top on the list of challenges confronting the sector was the high operating cost environment caused by the problem of inadequate electricity supply, high cost of alternative energy sources, excessive regulation and taxation, inadequate supply of foreign exchange for importation of raw materials, spare parts and machinery that are locally available.

He pointed out that the more than 200 per cent increase in the price of diesel had become a major constraint with spiral effects.

“MAN is greatly concerned about the implications of the over 200 per cent increase in the price of diesel on the Nigerian economy and the manufacturing sector in particular.

“More worrisome is the deafening silence from the public sector as regards the plight of manufacturers,’’ he added.

Ironically, he said, the Nigerian economy is completely dependent on importation of refined petroleum products including diesel and other vital manufacturing raw materials and there are currently no sufficient alternatives.

Ajayi-Kadir urged the government as a matter of priority to develop a National Response and Sustainability Strategy to address challenges emanating from the ongoing invasion of Ukraine by Russia.

Ajayi-Kadir added that the government should continue to support manufacturing to accelerate the process of recovery from the aftermath of COVID-19 and previous bouts of recession to avert the complete shutdown of factories nationwide with a multiplier effect on employment.

He explained that by the time the current domestic reserve of manufacturing inputs was exhausted, prices of manufactured products would soar in the face of acute shortfall in supply.

The MAN DG urged the government to issue licenses to manufacturing concerns and operators in the aviation industry to import diesel and aviation fuel directly to avert the avoidable monumental paralysis of manufacturing.

According to him, the government should urgently allow manufacturers and independent petroleum products marketing companies to also import AGO from the Republic of Niger and Chad by immediately opening up border posts in that axis in order to cushion the effect of the supply gap driven by the high cost of AGO.

He also urged the government to address the challenge of repeated collapse of the national grid which is causing acute electricity shortage in the country, especially for manufacturers.

Ajayi-Kadir also called for the removal of VAT on diesel as instant stimulus for immediate reduction in price and expedite action in reactivating or privatising petroleum products refineries in the country.

“Restrict the export of maize, cassava, wheat, food related products and other manufacturing inputs available in the country; and

grant concessional forex allocation at the official rate to manufacturers for importation of productive inputs that are not locally available,” he stressed.