By Charles Okonji
The Centre for the Promotion of Private Enterprise (CPPE) has commended the Federal Government over the suspension of excise duty, others through the recent Presidential Executive Orders.
According to the Founder of the CPPE, Dr. Muda Yusuf, the executive orders covered the suspension of the excise duty escalation contained in the 2023 fiscal policy measures imposed by the previous administration, suspension of green tax on some categories of vehicles, the deferment of the effective date of the finance act 2023 and some customs tariffs.
Dr. Yusuf explained that the move was to ensure compliance with the mandatory 90 days’ notice prescribed in the National Tax Policy as well as ensure reasonable notice for customs tariff reviews.
“We commend this move to normalize policy implementation processes consistent with the national tax policy and best practice principles. The executive orders also demonstrate the sensitivity of the Tinubu administration to the predicament of the manufacturing sector amid overwhelming headwinds and hassles to real sector activities in the Nigerian economy,” he stressed.
He noted that the Manufacturing sector is a troubled part of the economy, pointing out that the sector’s growth slowed to 1.6 percent in the first quarter of 2023, from 2.8 percent in the fourth quarter of 2022, having contracted by 1.9 percent in the third quarter of 2022.
He lamented that manufacturing sector barely contributes 10 percent to the Gross Domestic Product (GDP) in the first quarter of 2023.
The CPPE Bose stated, “The sector is grappling with the following, among others: Challenges of depreciation in the exchange rate which is impacting adversely on the cost of production, a situation which is severely inhibiting production and productivity in the sector. Intense pressure on cost of production arising from numerous structural bottlenecks, which is creating sustainability challenges for investors in the sector, especially those in the SME segment. They have experienced significant spikes in the cost of raw materials, cost of fund, high import duty, elevated energy cost, prohibitive cost of transportation and high cost of logistics. A huge proportion of these costs cannot be passed on to the consumers because of high consumer resistance.
“The economy is currently characterised by weak purchasing power amid intense inflationary pressures and recent fuel subsidy removal. Disposable income has been considerably diminished. This is taking a huge toll on sales and turnover of many manufacturers.
“Many manufacturers are currently struggling with unfair competition, especially from products imported from Asia which have flooded the Nigerian market, largely because of the porosity of the borders. These imports are often much cheaper than goods produced locally.”
He noted that energy costs remained high, explaining that the cost of diesel dropped slightly in the last one month, but still remains high at about N700per litre.
He stressed that the cost of gas is also prohibitive just as in electricity tariffs remains exorbitant.
“The cost of logistics has continued to be on the upward trend. Some of the reasons for this are the states of the roads, the limited freight capacity of the railway system, the crisis situation at our major ports, the traffic gridlock around the Lagos ports, the numerous check points around the ports and beyond.”
