The Manufacturing Association of Nigerian (MAN) has stated that the manufacturing is burdened by over 190 multiple taxes, stifling operations of its members.,

In a survey titled MAN CEO’s Confidence Index (MCCI) for second quarter of 2024, it stated that 90 per cent of the respondents confirmed that over-regulation by the government is depressing manufacturing productivity with 90.3 per cent attesting to multiple taxation reducing productivity in the sector and 67.4 per cent affirmed that port gridlocks negatively affect productivity in the sector.

The report noted that the aggressive decision of the Monetary Policy Committee to hike interest rates is creating a barrier to access to loans from banks.

“The 150 basis-point hike in the benchmark interest rate from 24.75 per cent to 26.25 per cent in May further escalated the cost of borrowing, restricted access to credit and discouraged productive investment in the manufacturing sector. By the end of the second Quarter, average prime and maximum lending rates for manufacturers had risen to 22.43 per cent and 32.73 per cent respectively. These were exorbitantly too high to promote productivity in the sector.”

The report noted that the scarcity of forex is making manufacturers to source for local raw materials, investment in local sourcing is being frustrated by exorbitant cost of borrowing and high rate of insecurity in farming areas.

“Hence, only a minimal improvement of 3.8 percentage points was recorded for local sourcing of raw materials during the period of review. 55.6 per cent respondent confirmed that local sourcing of raw materials has improved in the sector, and only 45.9 per cent agreed that the implementation of the Executive Order 003 has been beneficial to the sector.”

It added that 43.7 per cent of the CEOs surveyed agreed that the inventory of unsold manufactured goods had reduced in the last three months.

It blamed rising Inflation for the increased production costs, forcing manufacturers to raise their prices, thus, a shift in demand from some manufactured goods to basic household foodstuffs.

It observed that the effect of the harsh macroeconomic environment on manufacturing indicators including, insecurity, rising energy costs and lending interest rates continue to reinforce the inflationary pressure, thereby making the operating environment highly unfavourable and sales less profitable for manufacturers.

It therefore called for the implementation of the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee as well as the reduction of exchange rate to N800 for importation of raw materials, materials and spare parts not locally produced.

“Direct the NERC to review the high electricity tariff for Band A Customers as no manufacturer has access to the stated 20 hours minimum of electricity supply per day. Prioritise the domestic supply of gas to make it more accessible for local manufacturers and enforce the pricing of domestic gas supply in naira as it is only a fraction of gas export.” (Daily Trust)

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