The Manufacturers Association of Nigeria says the news of rising inflation in the country which has hit 18.17 per cent, as released by the National Bureau of Statistics recently, is worrisome.
They said this in a statement issued and signed by the Director-General, MAN, Mr Segun Ajayi-Kadir, a copy of which was made available to our correspondent.
The Manufacturers argued that the current inflationary trend became really worrisome as the manufacturing sector has yet to exit recession even when the nation’s economy had.
“The 18.17% inflation rate is not healthy for the well-being of the people and the growth aspiration of the economy. It should therefore be properly managed before it spirals out of control,” they said.
They argued that the current inflationary condition in Nigeria “adversely affects the profitability of the manufacturing sector and is partly responsible for its competitiveness.
“The latter being a major contributor to the low-export penetration of goods manufactured in the country into the international market.”
The Manufacturers noted that “it is evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates.
“Therefore, in the immediate, the government should assist manufacturing productivity with credit at competitive price.
“This could be in the form of enhancing existing special credit windows or creating additional ones for this important sector of Nigerian economy.”
They further suggested that “there is an urgent need for the Government to intentionally ensure price stability before the situation becomes deplorable”, and should also pursue consumer price stabilisation measures that would stimulate growth in agricultural output.
MAN added that the FG should deliberately support the manufacturing sector to increase output and further diversify the country’s revenue sources.
They called for a sustainable action plan by the Central Bank of Nigeria “to improve the external reserves to a defensive capacity that will raise the months of imports of Nigeria to a dependable level. This can be achieved by deliberately and sincerely partnering with the productive sector to grow non-oil export.”
They said further, “The Federal Ministry of Finance and CBN should work more closely when designing policies that affect the real sector of the economy.
“This is to prevent a situation where policies are working at cross purposes. For instance, while CBN was creating funding windows at single digit interest rate to encourage production, Government increased VAT from 5% to 7.5%. Similarly, Government increased minimum wage and also allowed increase in electricity tariff, and so on.
“Government, in partnership with the manufacturers, should select strategic products, particularly those with high inter-industry linkage, for backward integration support and upscale the drive for the resource-based industrialisation agenda.
“Give priority allocation of forex to manufacturers to import inputs that are not locally available and for which there are no immediate plan or resources to produce locally. Since policies are dynamic, they could change as soon as we develop local capacity.
“Also, there are quite a number of moribund industries in the country. There should be an industrial clinic to engender their resuscitation in order to boost output and ultimately achieve price reduction.”
The Manufacturers said “there is the need to give effect to these measures immediately as the current security situation and the continued incidence of COVID-19 is negatively impacting businesses and lowering their resilience capacity.”