Why Manufacturers Identify 7 Myriads Of Challenges Confronting Real Sector Is No Friend To Small Business?

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The Manufacturers Confidence Index (MCCI) an index which the Manufacturers Association of Nigeria (MAN) used to determine the changes in manufacturing activities quarterly as a result of changes in the macroeconomic ambience and Government policies that the size of commercial bank loan to manufacturing sector has not encouraged manufacturing productivity over the year.

MAN which consists of 400 CEOs member-companies interviewed identified 7 (seven) myriads of challenges that confronted the sector in the fourth quarter of 2020 as presented in Table 2 above. Some of these challenges are perennial while the other are thrown up by COVID-19 pandemic and EndSARS demonstration. However, the following measures were recommended by manufacturers on how Government can address these challenges:

 

i) Difficulty in accessing forex:

Association urges Government to grant concessional FX allocation at the official rate to manufactures for importation of productive inputs that are not locally available; also government should carry out swift approval of Usage of FX sourced outside the official market for manufacturers; and Fastrack the unification of all FX windows in the country.

 

ii) High cost of Electricity/Power:

MAN members called on government to reverse the current increment in electricity tariff and focus more on improving generation, distribution and efficient use of available electricity.

 

iii) High cost of transportation:

Over 400 CEOs MAN Member-Companies said government should as matter of urgency increase the provision of public transport system, upscale trade facilitation infrastructure at the ports and encourage the use of other ports outside Lagos.

 

 

iv) Low Demand of commodity:

Association said in order to stimulate purchasing power of the populates, government should focus on prompt payment of staff salaries, release funds to pay contractors and suppliers for completed contracts; also construct a critical generational pricing model for the economy that will recognize changes in inflation, exchange rate, lending rate in the determination of wages (minimum wage)-Nigeria’s Minimum wageofN30,000 (US$78.29) is about the lowest in the Emerging Development Countries (EMDCs)and does not encourage consumption; the real sector operators solicited for reverse the Value Added Tax(VAT) rate to5%from the current 7.5%

V) Difficult Access to Funds:

Association demands recapitalize of Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately meet the industry credit need at single digit interest rate; they also urge government to carry out coordinated reduction in monetary policy rate and lending rate; and also provide Credit Guarantee for industrial loans from commercial banks that boost productions.

 

 

vi) Regulatory Issue:

MAN member companies calls on government to direct all its Regulatory Agencies, especially Standards Organizations of Nigeria (SON), National Agency for Food and Drugs Administration & Control (NAFDAC) to reduce their respective administrative charges (Pre-COVID-19 rates) payable by manufacturing concerns by 50%.

 

 

vii) Poor Port Administration:

The Association identified improve on the wait time to clear container/cargoes clearance at the ports as a way in boost businesses; while calling for Install sound trade facilitation equipment at the ports such as scanners, etc.; and also solicited for reduction in the various port charges and remove demurrage for delayed clearance; and demanded resuscitate available rail tracks, construct new ones and link them to industrial hubs

 

viii) Unavailability of Raw-Materials:

MAN Members made it cleared that decision makers through policy formulation needed to select strategic product for backward integration and upscale the drive for resource-based industrialization agenda; also they recommended develop the production machine such as; iron and steel; petrochemical sectors to support manufacturing.

 

In the nutshell, the overall poor performances of the indexes, is an indication that demand for better management of the macroeconomy; strategic support for the manufacturing sector to maintain production despite the intensity of the second wave of COVID-19; intentional initiatives to better control the spread COVID-19; and the building of institutional framework that will checkmate all forms of restiveness that can dislocate the economy.

 

 


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