MAN Seeks Summit to Engage Govt at Ministerial Level to Discuss Fate of Manufacturing Sector in Nigeria
- Seeks President’s intervention to facilitate an engagement between CBN and MAN to discuss the recent lifting of the restriction on access to foreign exchange on 43 items.
The Manufacturers Association of Nigeria (MAN) is earnestly seeking for a summit to engage the government at the highest ministerial level to discuss the fate of the manufacturing sector in Nigeria.
Manufacturers Association of Nigeria, President, Otunba Francis Meshioye, made this position known in his address at the Adeola Odutola Lecture for the 51st Annual General Meeting of the Association held on Thursday 19th October, 2023 at Oriental Hotel, Victoria Island, Lagos.
Meshioye disclosed that the economy, and in particular, the manufacturing sector has been the worst hit by the combination of external and domestic challenges, adding that starting from 2015/2016, the Nigerian economy expressed a recession triggered by the global financial crisis that was due to the sharp decline in the oil market.
He stated further that just as the nation was beginning to recover from the recession, a global health pandemic emerged, disrupting economic activities and global supply chains, posing a significant threat to industries.
MAN, President said “Your Excellency, our Association has taken due notice of your policy pronouncements, particularly within your first 100 days in office. Some bold policy actions, including the removal of fuel subsidy and introduction of managed float of the exchange rate, have elicited the commendation of most economic actors and stakeholders.
“The fallout of those measures has equally thrown up some policy imperatives that should be addressed in order for the economy to rebound and for the citizenry to appreciate and reap the long-term benefits of the various reform measures.
“In addition, we seek your intervention to facilitate an engagement between the Central Bank of Nigeria and MAN to discuss the recent lifting of the restriction on access to foreign exchange on 43 items. We are confident that the outcomes of conversation will allow the CBN to achieve its objective of reducing pressure on the parallel market and effective control of the foreign exchange administration. At the same time, it will ensure that domestic production is not overrun by an influx of imported alternatives and our raw materials that are not locally available could be procured using the official market.”
He recalled that since its inception, MAN has been at the forefront of promoting and advancing the industrial development of our nation, stressing that in the course of its journey, our Association has engaged in impactful collaborations and continuous engagements with the Nigerian government and other relevant stakeholders, both within and outside the country.
According to him, MAN has consistently provided a platform for manufacturers to come together to share their expertise and resources, in order to expand the frontier of our economic development and foster a cross-border value chain to achieve sustainable economic growth and development.
He highlighted that the motivation behind the theme of this year’s Annual General Meeting, “Setting the Agenda for Competitive Manufacturing under the AfCFTA: What Nigeria Needs to Do” is due to the manufacturing sector’s successive low performance over the years.
At the same time, he said “we are looking at the promising growth trajectory and development opportunities that are embedded in the African Continental Free Trade Agreement (AfCFTA) for the Nigerian manufacturing sector.
“It has become a matter of necessity and urgency to deepen our awareness of the imperative of the AfCFTA; we need to develop the right strategies and concerted efforts to position our economy as the number one manufacturing hub of the African economy.”
He maintained that evidences from several parts of the world, including China, the United States, Japan, Germany, and South Korea, have shown the importance of the manufacturing sector in building a resilient economy.
In his words: “As an example, in 2021, average manufacturing output accounted for as high as 35% of Ireland’s GDP growth; 27.44% in the case of China, and 48% of Puerto Rico’s economy. In the United States, it accounted for more than 60% of the total exports and about 35% of the US economy’s total productivity growth. In Nigeria, the contribution of the manufacturing sector to the total output is not higher than 10%, with an average growth rate of approximately 2.3% over the last five quarters. Manufacturing sector development is key to industrialization. Sadly, the growth of industrialization in Nigeria remains at a very low ebb.”
He cited the African Development Bank (AFDB)’s industrialization index, which indicated that Nigeria is yet to perform impressively as well as the UNIDO’s industrial competitive performance index which has equally shown that Nigeria’s industrial sector has a low competitive capacity.
He affirmed that there is no better time than now to confront the challenge of low competitiveness and abysmal performance of this important sector.
Meshioye went on to mention some of the concerning issues militating against the performance of the manufacturing sector.
Speaking on Multiple Taxation he said “An average member of MAN is subjected to no less than 30 different forms of taxes, fees, and levies. The consequences of the incidence of multiple taxation are immense and include the rising cost-of-doing business and rapid divestment in the manufacturing sector. These issues combine to depress demand; worsen job losses and increase the incidence of poverty and low revenue generation from the sector.
“We are confident that the Presidential Committee on Fiscal Policy and Tax Reform will adequately address the matter. Our Director General represents the Organized Private Sector on the Committee and we look forward to working jointly with the representatives of your Ministry on the Committee to make the case for fair taxation of the manufacturing sector.”
On high cost of borrowing, MAN president said “Another constraining factor in the manufacturing sector is the challenge of high interest rate. The average bank lending rate for manufacturers is 26% per annum. We acknowledge the 9% interest rate on the N75 billion loan facility for a minimum of 75 companies that was recently promised by Mr. President.
“While commending His Excellency for this initiative, we are hopeful that it could even come at a lower rate and MAN would be given the opportunity to work with government to determine deserving sectors, agree the disbursement modalities and join in the evaluation and monitoring of its effectiveness.
“We believe that this inclusive approach will guarantee more success and create the basis for granting a much bigger emergency fund for the beleaguered manufacturing sector in the near future.”
On infrastructural inadequacy, he noted that “Poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities are serious impediments to the growth of the manufacturing sector. We look forward to government to improve investment and undertake effective reforms to guarantee reliable power supply; good road networks; and an efficient port system.”
He lamented on the low local content development and patronage of made-in-Nigeria products, adding “Nigeria has a low local content adoption and patronage of made in Nigeria products. We urge His Excellency to ensure effective enforcement of local content and patronage regulations. This can be achieved by strict enforcement of local content laws, incentivizing local sourcing of raw materials, and innovation in the manufacturing sector. Also, the public sector at all levels should, as a matter of national importance, step up their compliance with existing government directive on patronage of made-in-Nigeria products, including Executive Orders 003 and 005.”
On poor sectoral integration of the manufacturing sector, he stated that “the manufacturing sector is one of the sectors of the economy with wide sectoral interlinkages. However, the low level of development of auxiliary sectors is disentangling the manufacturing sector from the rest of the sectors. This is more so in agriculture, iron and steel and mining sectors. This has resulted in a limited supply of raw materials and other input for the manufacturing sector. Therefore, it is essential to encourage backward integration and sectoral linkages to promote a more sustainable manufacturing sector in Nigeria.”
On shortage of foreign exchange, he declared that “MAN appreciates the new administration’s policy on exchange rate unification as part of the measures to address the forex crisis. However, the problem is only half solved as forex shortages and high rate persist in the market. Addressing supply inadequacy is critical to a resilient manufacturing sector and we urge government to intensify its current efforts in this regard.”
He hinted that the sector is standing on the cusp of a new and critical era, adding that though the manufacturing sector is passing through hard and challenging times, setting a comprehensive agenda for the sector’s transformation will enhance its competitiveness and unlock its full potential.
He pledged that MAN has always been a key partner to Government and remain willing, available and ready to support the Government in formulating and executing its policies.
He announced the presence of Olusegun Olutoyin Aganga, CON, an illustrious Nigerian, a consummate accountant, accomplished international transformational economist, former two-time Minister of the Federal Republic of Nigeria; former Managing Director of Goldman Sachs, London; the founder of Nigeria Leadership Initiative and Aspen Global Leadership Network, and the Distinguished Guest Speaker, who delivered an exceptional lecture at the 3rd Adeola Odutola Lecture.
Dignitaries in attendance at the event include, Mr Rabiu Olowo, Representative of President Bola Tinubu, His Excellency, Otunba Niyi Adebayo, a former Governor of Ekiti State and immediate past Minister of Industry, Trade and Investment; International Development Partners, members of the Diplomatic Corps, Directors and Heads of Ministries, Departments, and Agencies of the Federal Republic of Nigeria, Members of the Organised Private Sector of Nigeria, Members of the Business Community, former Presidents and Directors General, Captains of industry, Scholars and partners in the media space.
High point of the event was the unveiling of the book “Turning the Wheel: A story of the Manufacturers Association of Nigeria”.
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