The Manufacturers Association of Nigeria (MAN) has stated that the current high inflationary rate is causing disruption to manufacturing and agricultural activities. MAN explained that many of its members were spending more on cost of production, which hurts in the process.
It urged the Federal Government to address the security concerns causing disruption to manufacturing and agricultural activities in order to ensure massive food production. Nigeria’s inflation rose to 15.92 per cent in March 2022, following a similar uptick recorded in the previous month as a result of the increase in energy costs. This represents the highest rate since October 2021. The President of MAN, Mansur Ahmed, an engineer, said in a chat with New Telegraph in Lagos, that the current situation around the high inflationary rates in the country had reached a stage of no retreat, no surrender for local manufacturers. Ahmed explained that the productive sector of the economy had been compromised, saying that government shoukd take adequate measures to address the challenges causing rising inflation in the Nigerian economy.
According to him, to address the current inflationary pressure, government needs to address the security concerns causing disruption to manufacturing and agricultural activities, reform the foreign exchange market to stabilise the exchange rate, reduce volatility and stimulate forex inflows and address forex liquidity issues through appropriate policy measures. Ahmed further urged government to fix the structural problems to boost productivity and competitiveness of domestic firms, address the challenge of high transportation and logistics cost, reduce fiscal deficit monetisation to minimise incidence of high-powered money in the economy, manage climate change consequences to reduce flooding and desertification, ensure the restoration of normalcy and good order at the nations ports to reduce transaction costs, reduce import duty on intermediate products and raw materials for industries to reduce production costs, especially in the light of the sharp depreciation in the exchange rate.
Government, Ahmed further said, should address concerns around high energy cost, create an investment friendly tax environment to boost investments and output in the economy. The MAN president listed other concerns to include “liquidity challenges in the forex market affecting access to manufacturing and other inputs, supply chain disruptions resulting initially from the pandemic and Russian- Ukraine conflict, security concerns disrupting agricultural output, climate change effects on agricultural production, structural constraints affecting productivity in the agricultural value chain and manufacturing and high transportation costs affecting distribution costs across the country.
“This is also reflected in the huge differential between farm gate prices and market prices, high and increasing energy cost, monetization of fiscal deficit (CBN financing of deficit) which is highly inflationary because of the liquidity injection effects on the economy, high transactions costs at the nations ports increases production and operating costs of businesses, high import duty on intermediate goods and raw materials, aggressive revenue drive by government agencies, taking a toll on cost of production.”
However, he noted that the negative impacts of the headline inflation were surmountable and can be seen in the living standards of common man in Nigeria. Ahmed added that high inflationary pressures remain a major concern to stakeholders in the Nigeria economy