Taiwo Hassan 
The Manufacturers Association of Nigeria (MAN) has said that a vibrant manufacturing sector is essential for driving economic growth and prosperity in the country.
The Director-General of MAN, Segun Ajayi-Kadir, however, said in an interview with New Telegraph in Lagos that achieving a vibrant manufacturing sector in the country was a tall order as the sector faces numerous challenges, including multiple taxation, limited access to credit, an unstable foreign exchange market, infrastructure deficits, and energy insecurity.
According to him, there is no doubt, the country’s manufacturing sector is the epicentre of the nation’s GDP, when assessing growth for the economy.
To address these challenges and unlock the potential in the manufacturing sector, AjayiKadir explained that the government must take decisive action.
To him, the Manufacturers Association of Nigeria recommends the creation of special windows for providing singledigit interest rates to productive sectors and relax stringent conditions for SMEs to access funding.
It also suggested that the Bank of Industry (BOI) should be recapitalised to meet the growing credit demand of industries; enhance credit information systems and broaden the scope of assets for collateral; implement the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee; reduce the excessive increase in Environmental Impact Assessment (EIA) and Effluent Discharge (EMP) fees imposed by NESREA, and also retain the current excise duty of N10 per liter on nonalcoholic beverages to avoid shutting down the industry.
Other suggestions by the association are to direct the Central Bank of Nigeria to clear $2.4 billion outstanding dollar obligations on FX forward contracts to support manufacturers; review import duty rates for production inputs, particularly those not locally available, and consider pegging the rate at N800; implement measures to streamline customs procedures, including increased use of technology and decentralisation of seaports; prioritise budgetary allocation for infrastructure development, especially along strategic economic hubs; encourage public-private partnerships for infrastructure development, including roads, railways, and port access roads; direct the Nigerian Electricity Regulatory Commission (NERC) to review the excessive increase in electricity tariffs for Band A customers, and to prioritise domestic gas supply to manufacturers and enforce Nairadenominated pricing, as well as ensure transparency in electricity tariff charges, invest in infrastructure and efficiency improvements by distribution companies, and introduce outage compensation mechanisms.
In all, the MAN helmsman said that “the higher growth recorded in the reviewed period is laudable, it is still relatively modest.
Given the prevalence of high unemployment and poverty, a double-digit GDP growth rate is necessary to achieve inclusive growth that benefits all segments of society.”
Speaking further on the profound impact of the recent CBN’s lending rate hike on Nigeria’s GDP, Ajayi-Kadir said: “Despite efforts to stabilize the economy, including aggressive monetary tightening by the Central Bank of Nigeria (CBN), which raised the Monetary Policy Rate (MPR) to an unprecedented 26.25 per cent, the desired outcomes in terms of curbing inflation and stimulating growth remained elusive.
“The higher interest rates exacerbated borrowing costs, placing further strain on businesses across various sectors, particularly manufacturing, which already faced significant challenges such as forex scarcity, high operational costs, and unreliable electricity supply.”
Speaking on employment in the manufacturing sector, the MAN DG stressed that the employment generation capacity of the manufacturing sector declined, with only 2,606 jobs created in H1’24, a 29.99 per cent reduction from H2’23.
According to him, year-on-year, job creation fell by 37.83 per cent, reflecting the ongoing challenges within the sector, including economic uncertainties, inflationary pressures, and an unfavourable business environment.
“The chemical and pharmaceuticals industry remained the highest job creator, while the motor vehicle & miscellaneous assembly industry created the fewest jobs,” he added.
