Manufacturers and labour unions across the country have urged the federal government to, as a matter of urgency, address instability in the forex market amidst rising inflation that is making life difficult for Nigerians and businesses, as the President Bola Ahmed Tinubu administration clocks one year in office today.
In separate chats with LEADERSHIP, they cited instabilities, policy somersaults with effects in the foreign exchange, erosion of working capital for businesses, epileptic power supply and insecurity, coupled with resultant job losses in the last one year.
They urged the federal government to address the earlier mentioned bottlenecks for quick economic gains of its policies.
Describing President Tinubu’s one year in office as one characterised by uncertainty which has created fear in the minds of would-be and existing investors, stakeholders in manufacturing, informal and labour sectors called on the government to ease the suffering of the people and businesses by confronting economic hiccups.
On his part, the director-general of Manufacturing Association of Nigeria (MAN), Segun Ajayi-Kadir had stated that the manufacturing sector remains the most sustainable driver of steady economic growth, inflow of foreign exchange and enduring shared prosperity.
“MAN is therefore expectant that the government will intentionally prioritise the manufacturing sector by implementing the sector-specific recommendations contained in this report and providing the required policy support and incentives. This is the surest way of revamping the sector and repositioning the economy towards sustainable growth and development,” he said.
He called for overhauling the power sector and incentivising investment in renewables to boost electricity generation and promote energy-cost efficiency. He urged the government to lead by example and give priority to patronage of made-in-Nigeria products in all its purchases and for all government contracts and projects.
According to him, government should encourage local sourcing of raw materials through comprehensive and integrated incentives to address the challenges of low productivity and imported inflation; encourage sub-national governments and private investors to leverage the opportunities provided by the Electricity Act 2023 to improve energy security in Nigeria; maintain all measures to boost the level of liquidity and degree of transparency in the official forex window; and manage the floating exchange rate system within an acceptable lower and upper bound, pending the actualisation of a net-exporting economy aspirations.”
He also called for prioritising forex and credit allocation to the manufacturers and reducing the number of BDCs into large and well-established operators to curb their excesses and untoward operations through effective management and supervision.
He insisted that the apex bank should allow forex access for importation of vital industrial inputs that are currently not available locally and subject them to backward integration policy that gives priority to a predictable sunset clause.
He pointed out that the CBN could develop a sustainable framework to channel credit interventions into the manufacturing sector, outside direct intervention, adding that it should mobilise commercial banks to intentionally provide long term single digit interest loans to the manufacturing sector to fast-track the actualisation of a $1 trillion economy.
The president of the National Union of Food, Beverages and Tobacco Employees (NUFBTE), Comrade Garba Ibrahim frowned at a situation whereby Nigeria is creating jobs for other countries and turning Nigeria into a dumping ground for their finished products.
“Many factories/shops closed down and relocated to neighbouring countries, hence producing there and bringing the products back to Nigeria to sell because they don’t have any more market than Nigeria,” he noted.
According to Ibrahim, multiple taxation, unfriendly policies by the federal government, hike in electricity tariff despite the poor electricity supply, fuel subsidy removal whereby many companies are struggling to survive based on high cost of doing business, have continued to affect the microeconomic and macroeconomic atmosphere under Tinubu’s regime.
And on his own part, the general secretary of Federation of Informal Workers of Nigeria (FIWON), Comrade Gbenga Komolafe, said, “We are all aware of the fact that the overall macro economy has been on a meltdown since PBAT came on board last year.
“The hyper inflationary effect of the removal of so-called subsidy on fuel prices as well as exchange rates liberalisation resulted in stratospheric increases in the prices of most basic goods and services. This, in turn, means that prices also skyrocketed overnight even in the midst of consumer incapacity to purchase anything as real incomes dwindled.”
Meanwhile, the Lagos Chamber of Commerce and Industry (LCCI) said the manufacturing sector in Nigeria has shown resilience and growth amidst recent reforms and government interventions aimed at fostering economic development and industrialisation.
The director-general of LCCI, Dr. Chinyere Alumona stated this on the scorecard for Tinubu administration after one year. She said the economy has been in an adjustment mode with several variables like stubborn inflation, persistent weakening of the naira, supply chain disruption driven by insecurity, and weak production base, defining the outlook at any given time.
“While policy choices have been liberal on the sides of the monetary and fiscal authorities, expected outcomes have not been recorded yet. Some bold decisions were taken at some point with sincere intentions of fixing structural deficiencies. Significant decisions were removing fuel subsidies, harmonising official and parallel exchange rates, and adopting a cost-reflective electricity tariff, among others. There is now a need for a systematic review and evaluation of these policies to achieve the best-desired outcomes,” she noted.
According to Alumona, in the last one-year, government spending was largely suboptimal due to substantial debt services and returning subsidy payments. Thus, removing subsidies was to reduce the enormous fiscal burden on the government and improve its financial well-being.
She pointed out that the Tinubu administration had made strides in fiscal consolidation, reducing the budget deficit to 4.5 per cent of GDP from 5.7 per cent the previous year, while public debt levels remain high at 34 per cent of GDP, though manageable within the current fiscal framework.
On the agriculture sector, LCCI DG stated that in the first year of Tinubu’s administration, the agriculture sector was impacted mainly by insecurity, fuel subsidy removal, and consistent exchange rate depreciation, which increased the cost of fertiliser and other input costs, among others.
She urged the government to fix the forex crises, adopt a lower exchange rate for import duties on imported raw materials for manufacturing, offer manufacturers concessionary interest rates in the face of shrinking credit to the private sector, and ensure the policy environment is stable and predictable.
