The Manufacturers Association of Nigeria says combined factors such as rising and high inflation rate, the perennially high interest rates and scarce/high rate of forex have compounded the downturn in the manufacturing sector.
The Director-General, MAN, Mr Segun Ajayi-Kadir said this in Lagos while reaction to the recently released inflation rate of 16.47 per cent by National Bureau of Statistics.
Ajayi-Kadir noted that the manufacturing sector has been struggling, particularly in the past 4 quarters, given the combined effect of COVID-19, deteriorating infrastructure, high regulatory compliance cost and tax obligations.
He added that the increase in the headline inflation from 15.75 per cent to 16.47 per cent remained a threat to the envisaged recovery and the growth of the industrial sector.
He called for concerted effort by the government to reverse this trend by addressing these challenges.
He said, “There is also the rise in food inflation which will compound the high cost of living and the disposable income of the average Nigerian.
“The resulting weak consumer spending will worsen the the high stock of unplanned inventory that the manufacturing sector is confronted with.
“You will recall that our economy slipped into its second recession in four years in the third quarter of 2020, after recording two contractions in a row.
“So the concerted efforts of Government to recover the economy will have to address the aforementioned challenges.”
In order to realise this, he said the private sector representative like MAN Manufacturers “is duly armed with economic recovery recommendations that relevant government authorities can implement to speedily revive the economy from its current state.”
Among them, Ajayi-Kadir advised the government to intensify efforts at stabilizing the consumer price level through growth in agricultural output and diversification of the Nigerian economy in order to guarantee stable prices in both agricultural and manufactured goods.
He said, “Also, there are quite a number of moribund industries in the country that should be resuscitated to boost output and thereby reduce prices.
“Government should also partner with the Manufacturers Association of Nigeria to accelerate the success in the resource-based Industrialisation initiative of the Association.
“It is evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates.
Therefore, for this moment and in the immediate future, government should assist manufacturing productivity with credit at competitive price.
“This could be in the form of concessions and enhancing existing special credit windows or creating additional ones for this important sector of Nigerian economy.
“Deliberate policy to stimulate domestic production and thereby increase domestic as well as foreign demands for goods would, in the long run, lower inflation and enhance exchange rate appreciations.”