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Manufacturers worry about falling naira value

By BusinessNews Staff on May 30, 2015

The continued decline in the purchasing power of the naira has been a major concern for manufacturers nationwide.

According to a statement from the Manufacturers Association of Nigeria on the implications of the current economic situation on the sector, the manufacturers expressed their concerns during the 286th meeting of the National Council of MAN.

The statement read in part, “Council noted with dismay the erosion of the naira purchasing power parity, high cost of foreign exchange and the attendant escalation of cost of imports and the resultant lack of competiveness of locally manufactured products.

“The Council also observed that the volatility of the foreign exchange market could lead to instability and unpredictability in procurement planning for industry operators. This will be exacerbated by the cost-push inflation which may lead to resistance by consumers, create demand crunch and result in high level of inventory of unsold locally manufactured products.”

It added, “These in the long run, if not addressed quickly, may ultimately result in cut in production, lay-off of workers, escalation of unemployment, factory closure and reduced tax income to government. MAN equally observed that the recently released fiscal policy for the implementation of the Economic Community of West African States Common External Tariff did not take care of many strategic manufacturing sub-sectors.”

The manufacturers subsequently agreed that the new government should, as matter of urgency, pay attention to a memorandum on economic and industrial policy submitted by MAN to the transition committee recently inaugurated by the President Muhammadu Buhari.

Another suggestion by the manufacturers was that bonafide manufacturers should be allowed to source their foreign exchange requirement through the Royal Dutch Auction System. MAN pledged to support the government in the certification of the bonafide manufacturers.

They also urged the new government to honour all outstanding obligations of the Export Expansion Grant to rekindle the impetus for export-oriented industrialisation. They asked the government to comprehensively review the EEG in a way that would further promote exports.

They suggested that Negotiable Duty Credit Certificates should be used to settle other financial obligations like payment of corporate electricity tax.

The manufacturers urged the new administration to streamline electricity tariff to reflect the actual consumption by industries instead of the current use of estimated bills. They asked for a special electricity tariff lines for heavy users of electricity like steel, cement and other strategic sub-sectors.

They urged the government to make it mandatory for distribution companies to procure meters from local manufacturers and distribute the same to all customers as this would properly regularise electricity billing.

They also suggested a deepening of the ongoing efforts to diversify the economy and consolidate the transformation in the agriculture, solid minerals and other sectors.

They said the government should facilitate improvement in the patronage of made -in-Nigeria product and services especially in government ministries, departments and agencies. They added that government should solicit the views of MAN before issues, policies and guidelines that could directly or indirectly impact on the manufacturing sector were approved for implementation.

As a way of further enhancing the performance of the manufacturing sector, the MAN president, Frank Jacobs, stated in a speech delivered during a recent media luncheon that MAN had plans to establish a centre for entrepreneurial studies to train and develop entrepreneurs, including aspiring manufacturers with capacity to add value to the Nigerian economy.

Jacobs added, “In the same vein, we intend to overhaul and upgrade the MAN resource centre to build the capacity of both large and small scale entrepreneurs to profitably manage their businesses, develop business plans and feasibility studies, diagnose ailing businesses and package them for funding.”`

[Punch]

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