MAN decries 18.17% inflation rate, suggests price stabilization measures
By Charles Okonji
The Manufacturers Association of Nigeria (MAN) has described the upsurge of inflation rate to 18.17 percent as worrisome, as manufacturing sector is yet to exit recession.
The MAN Director General, Dr. Segun Ajayi-Kadri who made this known in a press statement, noted that the manufacturing sector posted a growth rate of -1.51 percent in the Q4 2020 from -1.52 percent in Q3 of the same year.
Ajayi-Kadri noted that the current inflationary condition in Nigeria adversely affect profitability of the manufacturing sector, saying it is partly responsible for its competitiveness.
He pointed out that rising inflation is a major contributor to the low-export penetration of goods manufactured in Nigeria into the international market.
He urged the government to urgently pursue consumer price stabilization measures that will stimulate growth in agricultural output
The MAN DG said, deliberate support for the manufacturing sector to guarantee improved output that can engender the reduced intensity of too much money chasing after fewer goods must be pursued.
He advised that government to further diversify the country’s revenue sources, adding that a CBN sustainable plan to improve the external reserves to a defensive capacity that will raise the months of imports of Nigeria to a dependable level should be considered.
He noted that the above can be achieved by deliberately and sincerely partnering with the productive sector to grow non-oil export.
“The Federal Ministry of Finance (FMF) 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 percent to 7.5 percent. 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 industrialization 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.” Ajayi-Kadri stated.
The DG lamented numerous moribund industries across the country, recommending industrial clinic to engender their resuscitation in order to boost output and ultimately achieve price reduction.
He noted that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates.
“Therefore, in the immediate 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.
“There is 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.” He stressed.
