MAN lists high energy costs as major challenge

The Manufacturers Association of Nigeria (MAN) CEOs Confidence Index (MCI) for the second quarter of 2023 has revealed that rising energy costs remain a major challenge facing manufacturers in the country. Challenges facing manufacturers according to the survey includes, energy costs; high cost of credit/inadequacy of loanable funds; multiple taxes/charges/levies/same tax policy for local producers and importers; unavailability of raw materials/delay in receiving imported raw materials; high cost of raw materials and scarcity of forex/high exchange rate/poor allocation of forex. According to the survey, about 63.1 per cent of manufacturers enumerated disagreed that government capital expenditure encourages productivity in the manufacturing sector; 23.9 per cent of those enumerated agreed, while about 13.1 per cent were unsure. MAN said the aggregate index score of MCCI in the second quarter of 2023 declined by 1.4 points to 52.7 points from 54.1 points obtained in the first quarter of 2023, which is also 2.3 points less than 55.0 points recorded in the fourth quarter of 2022. According to the survey findings, manufacturers within the country continue to grapple with the reverberations of the Naira Redesign policy, which was implemented during the tenure of Godwin Emefiele, the former Governor of the Central Bank of Nigeria (CBN).  Furthermore, manufacturers lament the hindrance caused by two concurrent factors, among which is the upswing in motor vehicle insurance expenses, which continues to add to the operational burden of manufacturers. Additionally, the escalation in logistics costs is a concern that stems from the heightened pricing of premium motor spirit (PMS), commonly referred to as petrol. This is of particular significance as manufacturers need to distribute their goods extensively across the various states of the country, entailing substantial transportation expenses. The survey’s observations underscore that the second quarter of 2023 witnessed a substantial uptick of 17.3 per cent in both production and distribution costs for manufacturers. This surge in costs further accentuates the challenges faced by the manufacturing sector and calls for a comprehensive examination of strategies to mitigate these adverse effects. Director General of MAN, Segun Ajayi-Kadir, in the report said government’s capital expenditure should address the issues of economic infrastructure such as roads, electricity, water, etc. that support industrial sector businesses. “The absence of economic infrastructure contributes significantly to the high cost of operating environment which obstructs the development of manufacturing in Nigeria. “It is highly expedient that the government strives to ensure the harmonisation of fiscal and monetary policies that will pave the way for a stable macroeconomic environment needed to promote productivity in the manufacturing sector and improve the ease of doing business,” he said.

Interest rate hike will affect output, increase unemployment – MAN

Manufacturers Association of Nigeria (MAN) has said that increase in the monetary policy rate by the Central Bank of Nigeria (CBN) would reduce the sector’s output and its ability to absolve new personnel. The Director General of MAN, Mr Segun Ajayi-Kadir who disclosed this in a statement said an increase in MPR will compound the imminent recession in the manufacturing sector and negatively impact on its operations. He said that such a rise would not not only lead to decline in government revenue as result of low productivity of the manufacturing sector, it will as well lead to high cost of production and decline in capacity utilisation. According to him, a hike in MPR will result in an increase in the cost of borrowing that will further discourage investment, reduction in inflow of investment and high product prices owing to rising factor costs, which will in turn render the sector less uncompetitive.  Stating MAN position on the increase, he said upward review in MPR from 18 per cent to 18.5 per cent will certainly lead to an increase in lending rates and worsen the uncompetitiveness of the manufacturing sector.  He said the interrelationship among macroeconomic variables is essential in policy formulation, as the movements of interest rate, inflation rate and exchange rate have direct impact on investment, employment and output of any economy.   He said according to the conventional monetary framework that was adopted by the CBN, increase in MPR should increase interest rate and by extension attract financial investment. However, it will also increase the cost of borrowing, crowd out more investments in the real sector and lower the output of the manufacturing sector.” He said there is a need for the government to take pragmatic steps to quell the inflationary pressure and reposition the economy. “To sustained growth in the sector and economy in general, he said the government needs to take immediate and concrete action to address the manufacturers’ forex needs in order to support and sustain production, adding that prioritizing allocation of forex to the manufacturing sector to procure raw materials, machines and spare parts that are not available locally is the way to go,” he said.  

Plateau signs agreement with SON to boost enterprises

The Plateau government has signed a Memorandum of Understanding (MoU) with the Standards Organisation of Nigeria (SON) to boost the activities of Micro, Small and Medium Enterprises (MSMEs) in the state. The MoU was signed on Wednesday in Jos by the Director-General of the Plateau State Microfinance Development Development Agency (PLASMIDA), Mr. Bomkam Wuyep, for the state government. Also, the Director-General of SON, Malam Farouk Salim, who was represented by Mr Sale Babaji, the North Central regional manager, signed on behalf of Salim. Wuyep said that the signing of the MoU with SON would enable the MSMEs in the state to take advantage of the services of SON which would enhance the production of the quality of locally produced goods making them of standard and competitive in the international markets. Wuyep also said that the signing of the MoU would enable the MSMEs in the state to enjoy discounted registration with the SON. According to him, the certification the MSMEs get from SON will also enable them to access certain funding. The director-general of SON said the signing of the MOU would help the MSMEs in the state to grow and ensure that their products are standardized in line with international standards. According to him, the MoU would also enable the MSMEs at the grassroots to benefit from the packages of SON