The Manufacturers Association of Nigeria has expressed concern that the slow growth in the economy is hindering the prospect of establishing a strong fiscal space and buoyant foreign reserve.
In a statement issued on Wednesday said the association claimed that despite the higher oil prices as well as the improvement in terms of trade, the expansion of the growth of the Nigerian economy remains sluggish above the population growth rate.
The statement read in part, “The accompanying prospect of establishing a strong fiscal space and buoyant foreign reserve remains unutilized. Inflation is at a 17-year-high of 21.09 per cent and petroleum subsidy payment is not only draining the government’s coffers but accelerating the path of the economy to debt peonage.”
MAN noted that while fiscal indiscipline, heightened insecurity, slow COVID-19 recovery, oil theft, and the war-induced energy crisis were the lingering factors driving the economic headwinds, recent environmental and climatic challenges are significantly leaving a negative mark.
MAN added that the recent report by the National Bureau of Statistics revealed that the year-on-year real GDP growth of the Nigerian economy stood at 2.25 percent in the third quarter of 2022.
“At a real GDP value of N18.96 trillion, the latest performance signifies a shortfall of 1.78 percent from 4.03 per cent real GDP growth recorded in the third quarter of the previous year. It also indicates a 1.29 percent decline from the value of economic activities recorded in the second quarter of 2022,” the body stated.
According to MAN, the declining growth is an indication of lower production and lower employment.
“Therefore, the continuous downturn of the economy has further validated the urgent need to release an updated unemployment rate that corresponds with the current economic situation. “The last published figure was in December 2020 at 33.33. Analysts had projected that the country’s rate of unemployment is well above the 40 per cent mark,” it maintained.
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The association added that the country has experienced a setback in the fight against poverty resulting in a downgrade from a middle-income to a low-income economy.
It also explained that the growth slowdown will result in higher unemployment that can diminish the taxable capacity of individuals and in turn worsen the debt-to-GDP and debt service-to-revenue ratios.
MAN noted that this would result in lower manufacturing turnover, heightened forex challenges, slow Infrastructural development and a reduction in credit Intervention.
It urged the government to facilitate the formal service sector in order to widen the tax net and avoid multiple impositions of tax on manufacturing companies.
“Jettison the failing hard peg policy and establish a clear and transparent market framework to guide the interventions of the CBN in the forex market.
“Synergistically align monetary and fiscal policies while also curbing fiscal deficits by the gradual removal of fuel subsidy backed with appropriate palliatives for the poor,” it counselled.
The association also clamoured for increased electricity generation and encouraged the government to build super grids that are regionalised to avoid continuous national system collapse and ensure a more robust transmission infrastructure.
MAN stressed the need to further reduce the reliance of the country on imported products and raw materials by encouraging local sourcing through a comprehensive and integrated incentivised system since Nigeria is largely bearing the brunt of imported inflation.
