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;