The Manufacturers Association of Nigeria (MAN) says the slight reduction in inflation rate in April is still very far from expectations.
Mr Segun Ajayi-Kadir, Director-General, MAN, said this in an interview on Wednesday in Lagos.
Ajayi-Kadir said this was due to its double digits nature with extensive impacts on the manufacturing sector and the economy generally.
The National Bureau of Statistics (NBS), had on Monday said that inflation rate reduced by 0.05 per cent in April compared to what obtained in March.
It said while inflation rate stood at 18.17 per cent in March, it reduced to 18.12 per cent in April.
Ajayi-Kadir said that efforts needed to be geared toward sustaining identified factors that drove inflation rate down by 0.5 per cent.
He also called for massive improvement on the regulatory and policy environment to further crash inflation to the barest minimum.
The MAN DG noted an urgent need for government to intentionally ensure price stability quickly, before the situation became deplorable.
He said manufacturers identified unstable exchange rate, high costs of clearing consignments at ports, high liquidity level, distortion in food production, supply and insecurity as causes of rising inflation.
“Efforts also need to be doubled to initiate policy measures that will address rising incidence of insecurity required for seamless farming, food production and ensure monetary flows are directed toward productive activities.
“Unfortunately, the Nigerian economy is still struggling to recover fully from the repeated bout with recession and can therefore not afford high inflation rate, which is not a recovery recipe.
“In addition, the manufacturing sector is still battling for survival as its growth rate is still neck deep in the negative region with a growth rate of -1.51 per cent in the Q4 2020 from -1.52 per cent in Q3 of the same year.
“The current inflationary condition in Nigeria adversely affects the profitability of manufacturing and is partly responsible for its poor competitiveness in the sector.
“Of course, inflation rate of 18.12 per cent is still not healthy for the well-being of the people and the growth aspiration of the economy and should therefore be properly managed before it spirals out of control,” he said.
Ajayi-Kadir called on government to pursue consumer price stabilisation measures that would stimulate growth in agricultural output, further diversify the country’s revenue sources and deliberately support the manufacturing sector.
He also tasked the Central Bank of Nigeria (CBN) on a sustainable plan to improve external reserves to a defensive capacity that would raise the months of imports of Nigeria to a dependable level.
This, he noted, could be achieved by deliberately and sincerely partnering with the productive sector to grow non-oil export.
“Federal Ministry of Finance and the CBN should work more closely when designing policies that affect the real sector of the economy 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 per cent to 7.5 per cent . 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 plans or resources to produce locally.
“Also, there are quite a number of moribund industries in the country. There should be an industrial clinic to engender their resuscitation to boost output and ultimately achieve price reduction.
“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 said
