MAN proffers pathways for gov’t to achieve sustained industrialisation, steady economic growth
The quest for the manufacturing ecosystem in Nigeria to chart a path to sustained industrialisation and steady economic growth has reportedly remains threatened as little to no attention is given to the numerous pressing challenges that limit the performance of the manufacturing sector—a sector widely regarded as the driver of economic growth and sustainable development. Undoubtedly, a rapidly growing economy is only achievable when the binding constraints hindering the performance of the manufacturing sector are confronted head-on. It is in this regard and in line with the position of Manufacturers Association of Nigeria (MAN), that through its MAN CEOs Confidence Index (MCCI) (Q2) 2024 recommended that the Government committedly adopt the some measures to tackle the burning challenges that are waning manufacturers’ confidence and deviating the country from the path of a sustainable robust growth, writes Editor Gentechnews, Tony Nwakaegho,
The Manufacturers Association of Nigeria (MAN) has through its MAN CEOs Confidence Index (MCCI) (Q2) 2024 worked assiduously and came up with the result of the second quarter (Q2) 2024 MCCI survey which shows the perceptions of manufacturers on movements in the macroeconomic and operating environments between Q1 2024 and Q2 2024 as well as their sentiments and projections for the next quarter and proffered the pathways for government to achieve sustained industrialisation and steady economic growth.
On taming inflation, stabilising exchange rate and improving access to forex, MCCI recommended that there is a need to “prioritise forex sale to productive sectors of the economy, particularly the manufacturing sector; Stabilise the value of the Naira by managing the floating exchange rate within a business-friendly threshold and introduce other measures that will promote healthy dollar transactions; Direct the CBN to clear all outstanding dollar obligations on the FX Forward contracts of manufacturing concerns to engender confidence in the market;
“Review the foreign exchange rate for import duty assessment for production inputs, including raw materials, machines and spare parts that are not locally available by pegging the rate at N800, pending the stabilisation of the exchange rate; Tame inflation by focusing less on interest rate hikes and more on exchange rate management which is highly linked to rising food prices and energy cost; Maintain the recent coordination with the monetary authority by sustaining the import duty waivers on essential foods and inputs to control inflation; Promote convergence with the monetary authority by providing financial incentives to only critical productive sectors like the manufacturing sector in order not to fuel inflation.”
MAN CEOs Confidence Index (MCCI) noted on promoting energy security that government should “direct the NERC to review the high electricity tariff for Band A Customers as no manufacturer has access to the stated 20 hours minimum of electricity supply per day; Prioritise the domestic supply of gas to make it more accessible for local manufacturers and enforce the pricing of domestic gas supply in Naira as it is only a fraction of gas export; Refocus the Gas Master Plan to ensure sufficient supply of gas for power generation; Increase transparency in electricity tariff changes and improve electricity access by introducing outage compensation mechanism; Reduce energy transmission and distribution losses by adopting modern technologies such as smart sensors and machine learning algorithms for rapidly predicting and detecting technical faults to enable quicker repairs;
“Commence the effective implementation of the Electricity Act 2023 by judiciously utilising the ₦115 billion FG-USAID deal to support the private sector and address some of the longstanding challenges; Urgently develop a detailed gas development blueprint that incorporates regulatory gas pricing and improves public-private engagement in the sector; Give effect to the recommendation of the inter-ministerial committee on gas which was set up to develop the roadmap for addressing the challenges of gas pricing, gas flaring, gas infrastructure and policy gaps;
“Promote energy efficiency, conservation, and sustainability by raising awareness of renewable energy, establishing standardised policies, and adopting local production of energy-efficient appliances; Encourage investment in the electricity value chain and revisit the power sector reform processes to close electricity access deficit and ensure efficiency in the performance of Generation, Transmission and Distribution companies through improved public- private sector partnership; Ensure the connection of all consumers to the electricity grid through adequate metering to avoid free riding and unfair charges on the few connected consumers.”
On ensuring affordable lending rate and increased access to credit, the MCCI recommended that there is also the need to “create special windows for delivering single-digit interest rate to productive sectors of the economy, while ensuring the relaxation of stringent conditions that deny SMI’s access to such funding scheme; Recapitalise the Bank of Industry (BoI) to match the huge credit demand of industries; Identify and address the intended and unintended consequences that may occur during the bank recapitalisation process in order to maintain financial stability; and increase access to credit information by providing credit scores to financial institutions and broaden the scope of assets for collateral.”
On upgrading infrastructure, the report recommended that government should “ensure adequate installation of scanners, functional CCTVs, adoption of digital automation solutions of all port processes to aid clearing of goods at the port; Decentralise seaports nationwide to decongest the ports in Lagos; Prioritise budgetary allocation for the construction of infrastructure along strategic economic hubs;
“Fast-track the completion of the Brass Methanol Project, the Assa North-Ohaji South (ANOH) Project, the Obiafu/Obrikom/Oben (OB3) Gas Pipeline project and the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project to improve the capacity of the midstream gas sector; Upscale the involvement of the private sector in the infrastructure concession window to enhance the rapid development of infrastructure including road and rail networks, and rehabilitation of access roads to the ports; and Partner with domestic and international investors that possess both the financial and technical expertise to fund the re-construction of Tin Can Port.”
On addressing high and multiple taxation, the MCCI noted that government should “Implement the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee and ensure the provision of consistent fiscal incentives for exporters of manufactured products; Reduce the over 1000% increase in the EAR and EMP by NESREA to 100% increase; and maintain the current excise of N10 per litre on non-alcoholic beverages as contained in the 2022-2026 roadmap to avoid the shutdown of the non-alcoholic beverage industries.”
Ensuring food security & promoting local sourcing of raw materials, the MCCI stated that the government should ensure adequate security in the geographies surrounding food production belts and farmlands including access roads, etc. to encourage movement of farmers and local sourcing of raw materials.
MCCI pointed out the flaws in promoting local patronage and recommended that government should “set up an Inter-Ministerial Committee to monitor and enforce the implementation of the Executive Order 003 and the Public Procurement Act 2007; Mandate contractors in Government Ministries, Departments and Agencies at the different tiers of government including security, military and para-military agencies to give priority to the patronage of made-in-Nigeria products in line with the Executive order 003; Effectively apply the subsisting margin of preference of 40% and introduce monitoring mechanisms as well as sanctions for non-compliance, including prosecution of offending public servants; Train and re-train stakeholders such as MDAs, exporters, staff of the Nigerian embassies and High Commissions on favourable economic diplomacies capable of promoting local and international publicity for made-in-Nigeria products.”
On addressing policy inconsistency, the MCCI report recommended that there is a need to “encourage regular meetings, consultation and collaborations among the CBN, the Federal Ministry of Finance, the Tariff Technical Committee (TTC) and the private sector; Lift the ban on Styrofoam and Single Use Plastics (SUPs) and enforce the states to align with the timeframe stipulated in the national regulation; and Direct SON to revert to the issuance on generic MANCAP permits to encourage innovation in the production of domestic appliances.”
On improving trading activities, the MCCI stated that government should “Ensure effective implementation of the National Single Window and the One-State-One-Product Project; Set KPIs for Nigerian diplomats and High Commissions aimed at doubling the country’s export value through effective marketing of Made-in-Nigeria goods; Direct the Nigeria Customs Service (NCS) to upload approved items of Chapter 99 on their platform immediately; Adequately mobilise the NCS and other agencies of government to checkmate the influx of substandard products and high level of counterfeiting;
“Enact a Law for the establishment of the Nigeria Office for Trade Development by merging the National Action Committee on AfCFTA with the Nigeria Office for Trade Negotiation; Completely digitise certificates of origin to reduce export time and reduce cost of import by issuing certificates that cover several shipments; Further engage the Manufacturers Association of Nigeria (MAN) and the All Farmers Association of Nigeria (AFAN) to increase the level of advocacy on quality standards required by major exporting partners as well as direct the NAC, NEPC and FMITI to increase private sector’s awareness on trade agreements and protocols.”
