Following a statement from the Manufacturing Association of Nigeria (MAN), more than 190 different levies impede the manufacturing sector and hinder the operations of its members.
According to a poll called the MAN CEO’s Confidence Index (MCCI) for the second quarter of 2024, 90% of respondents said that excessive government regulation is lowering manufacturing productivity, 90% said that multiple taxes lower productivity in the industry, and 67.4% said that port bottlenecks have a negative impact on productivity.
According to the research accessed by BrandSpur national news, getting bank loans is becoming more difficult as a result of the Monetary Policy Committee’s proactive decision to raise interest rates.
The report states: “The 150 basis-point hike in the benchmark interest rate from 24.75 percent to 26.25 percent in May further escalated the cost of borrowing, restricted access to credit, and discouraged productive investment in the manufacturing sector. By the end of the second quarter, average prime and maximum lending rates for manufacturers had risen to 22.43 percent and 32.73 percent, respectively. These were exorbitantly too high to promote productivity in the sector.”
According to the survey, the lack of foreign exchange is forcing industries to look for local raw materials, but the high cost of borrowing and high level of insecurity in farming areas are discouraging investment in local sourcing.
Continuing: “Hence, only a minimal improvement of 3.8 percentage points was recorded for local sourcing of raw materials during the period of review. 55.6 percent of respondents confirmed that local sourcing of raw materials has improved in the sector, and only 45.9 percent agreed that the implementation of the Executive Order 003 has been beneficial to the sector.”
Furthermore, 43.7% of the CEOs polled said that during the previous three months, there had been a decrease in the inventory of unsold manufactured items. It attributed the rise in production costs to rising inflation, which pushed manufacturers to hike their prices and resulted in a shift in consumer demand from some manufactured goods to staple foods.
It was noted that the adverse effects of the challenging macroeconomic climate on manufacturing indicators, such as rising energy prices, lending interest rates, and insecurity, keep up the inflationary pressure, making the business climate extremely unfavourable and sales for manufacturers less profitable.
As a result, it demanded that the Presidential Fiscal Policy and Tax Reforms Committee’s recommendations be put into practice and that the exchange rate for the importation of raw materials, materials, and spare parts that are not manufactured locally be lowered to N800.
Adding: “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.”
