Photo caption: MAN logo
By Charles Okonji
The Manufacturers Association of Nigeria (MAN) has raised alarm that continuous import of fuel will not only deindustrialisation Nigeria, but will lead to national economic retrogression.
This was contained in MAN’S April review of the Nigeria Development Update (NDU), which MAN quoted the World Bank, alongside its subsequent clarification regarding the downstream petroleum sector.
The document signed by the Director General of MAN, Mr Segun Ajayi-Kadir, further states that national energy security is paramount in today’s volatile global climate.
He reiterate that MAN’s fundamental objection to the initial premise of reinstating petrol import licenses was a viable, long-term strategy to avert an inflation spike, stressing that it is not, and should not be considered as an option.
“In clear terms, suggesting that Nigeria should open its borders to imported Premium Motor Spirit (PMS) to solve an inflationary crisis is structurally flawed, counterproductive, and highly detrimental to Nigeria’s industrialization agenda. In the long run, it will perpetually constrain Nigeria into the circle of exporting jobs and wealth, and importing poverty.” Ajayi-Kadir expressed.
On MAN’s position, he pointed out that the World Bank’s report posited that the suspension of import licenses stifled competition, allowing domestic ex-depot prices to rise, thereby driving up inflation.
“This analysis panders to short-term bias and does not take into account the following foundational macroeconomic realities of the Nigerian economy: The FX Drain and the Major Driver of Inflation.
Nigeria’s inflation is fundamentally cost-push and can be aggressively driven by exchange rate volatility.
“Therefore, promoting PMS imports means returning to the era of fiercely competing for scarce foreign exchange (FX) to fund foreign refineries. Such depletion of FX depreciates the Naira further. A weakened Naira spikes the cost of importing critical raw materials and machinery for domestic manufacturers, triggering a far bigger wave of inflation across all sectors of the economy than a temporary 12% differential in fuel pump prices.
“For decades, Nigeria exported raw crude only to import refined products; effectively exporting our wealth, jobs, and capital to subsidize the manufacturing sectors of Europe and Asia. Halting import licenses and empowering local refining is the most significant structural victory Nigeria has achieved in its energy sector in fifty years. Therefore, reverting to importation is to succumb to economic sabotage.
“As the World Bank’s retraction eventually conceded, global energy supply chains are highly vulnerable to rising geopolitical tensions, particularly those in the Middle East. Relying on imported fuel exposes Nigeria to damaging external supply shocks. True and lasting price stability can only be achieved through local production, where internal supply buffers insulate the domestic market from international crude freight premiums and global supply chain disruptions.” DG averred.
Ajayi-Kadir staed that MAN advocates for practical, home-focused, and sustainable measures to mitigate the global energy supply shock and lower consumer prices.
According to him, the following are MAN’S advocacy; “Optimization of the Naira-for-Crude Policy: While the implementation of crude oil sales in Naira to local refineries is a landmark structural victory, its current execution requires unmitigated optimization. The Federal Government should mandate total transparency in the domestic pricing matrix and ensure that local refineries receive their full, unhindered daily crude quotas without bureaucratic bottlenecks. The true macroeconomic benefit of this policy must be allowed to materialize for the end consumer and the productive sector.
“Aggressive Rollout of Alternative Energy (CNG): The government should accelerate the Presidential Compressed Natural Gas (CNG) Initiative by heavily subsidizing the conversion of commercial and industrial transport fleets. Logistics account for a massive chunk of consumer goods inflation. Shifting from PMS and Diesel to abundant, locally sourced CNG is the ultimate inflation-buster.
“Targeted Interventions for the Productive Sector: We should not expand trade deficits through petroleum imports; we should focus on removing supply-side bottlenecks for manufacturers. This includes optimizing the National Single Window (NSW) platform; removing the critically burdensome 4% FOB levy and facilitating single-digit credit facilities for manufacturers to scale production and lower unit costs.
“Investment in Critical Power Infrastructure: The reliance on liquid fuels for industrial production is a major component of our energy crisis. Fixing the national grid and incentivizing captive, off-grid renewable power solutions for industrial clusters will significantly reduce our dependence on costly refined petroleum.”
