Challenges of lack of forex, multiples taxes ,others hamstringing manufacturing sector-MAN
Manufacturers’ umbrella body, the Manufacturers Association of Nigeria (MAN) has listed the challenges faced by its members in 2021, adding that unless the issues are effectively , the on-going effort to return the ailing economy to the path of sustainable growth would remain an idle fancy.
MAN’s position which is contained in Second & Third Quarter 2021 Economic Report, released to the media at the weekend highlighted the challenges identified during the quarters under review as lack of forex/unstable access to forex/excessive depreciation in forex, multiple taxes/Levies by government agencies, over-regulation/multiple visits by government agencies, high cost of electricity/High electricity tariff, gridlock at the national ports/congestion at the ports and high cost of transportation/Shipping.
Others are lack of credit facilities/lack of funds for the industries/high lending rate, high cost of raw-materials, low sales/low government patronage, high cost of production/high inflation,poor infrastructure/bad road network and insecurity.
Also listed are increase in smuggling of textile materials into the country ,unfavourable trade policy shortage of skilled labour and frequent change in government policies.
MAN noted , however that “increasingly rebounded in the third quarter of 2021 notwithstanding the available macroeconomic downside risks such as high inflation, double digit lending rate and unfavourable exchange rate parity. Inflation averaged 16.63% in September 2021; Prime and maximum lending rates averaged 11.62% and 28.0% at the end August, 2021Nigeran economy expanded by 4.03% in the third quarter of 2021 which was 0.98 percentage point less than 5.01% recorded in the second quarter but 3.52 percentage point greater than 0.51% achieved in the first quarter of the year,” adding that “the sustained high crude oil price (Bonny Light) which stood at USD65.57 per barrel (pb) in March rising to USD72.21 in June and USD74.04 pb in September 2021 galvanized activities in the year.
“Economic activities respectively; at the official forex window exchange averaged N381.00/US$ in September 2021 and N481.21/USD at the BDC segment for the same month.”
However, the suspension of forex allocation to BDCs in the quarter was met with mixed responses and it is hoped that the Commercial Banks will drive the process implementation effectively. As economic activities respectively; at the official forex window exchange averaged N381.00/US$ in September 2021 and N481.21/USD at the BDC segment for the same month.
Aggregate MCCI increased 54.0 points in third quarter of 2021 from 52.9 points of second quarter of the year, thus, corroborated the continuous improvement in economic activities in the country.
In order to sustain and improve the performance of the sector in 1st quarter of 2021, the following measures were recommended by manufacturers.
Granting concessional forex allocation at the official forex market to manufactures for importation of productive inputs that are not locally available
Following the suspension of forex allocation to BDCs, it encourage the Banks to build more capacities through designate desks for handling the streaming applications and Form M to ensure seamless and timely processing of forex application by manufacturers.
Government to continue with the Eligible Customer initiative plan and create a platform where all stakeholders within NESI will deliberate on the implementation of the regulation and resolve all pending issues that have affected the seamless running of the Eligible Customer initiative. It also called for a reviewing the current increment in electricity tariff.
MAN wants government to publish the list of approved of the harmonized taxes and levies for the manufacturing sector by the Tax Joint Board (JTB and commence implementation of the harmonized taxes and levies project which should be monitored and enforced strictly by the Joint Tax Board (JTB).
Government should streamline function NAFDAC with the control of only food related chemical martials, while SON oversees non-food related ones to end the unbridled double regulation of Chemical materials by the Standards Organization of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC).
It also called for fully implementation of the report of the Steve Orasanye Committee on the Restructuring and Rationalization of the Federal Government Agencies, parastatal and Commissions.
Government should provide credit guarantee for industrial loans from commercial banks ad intensify the security of life, property and investment within the restive regions of the country, particularly in the North-East where manufacturing activities are gradually grinding to a halt;