To fast-track the actualisation of the $1 trillion dollar economy plan of the Federal Government, the Manufacturers Association of Nigeria, MAN, has urged the Central Bank of Nigeria, CBN, to develop a sustainable framework to channel credit interventions into the manufacturing sector, outside direct intervention.
MAN added, the CBN should mobilise commercial banks to intentionally provide long term single digit interest loans to the manufacturing sector.
MAN, in its “Manufacturing sector outlook for 2024” signed by Segun Ajayi-Kadir, its Director-General and sent to Sunday Vanguard, said the CBN should intensify its collaboration with the fiscal authority; Federal Ministry of Finance and by extension the Tariff Technical Committee (TTC) for proper policy alignment on the appropriate HS Codes for items that Nigeria has sufficient capacity to discourage importation and save scarce foreign exchange.
The MAN DG counselled, “Reasonable stability in the monetary policy ambience as the apex bank reverts to playing its conventional roles and deliberately improves forex supply to the productive sector for import of inputs not available locally.”
Ajayi-Kadir said, “Hopefully, the Government will see the manufacturing sector as the key driver of sustained economic growth and will give the sector the priority that it deserves.
Continuing his forecast: “In 2024, sectoral real growth is expected to hit about 3.2 percent; contribution to the economy will most likely exceed 10 percent and the Manufacturers’ CEOs Confidence Index is predicted to rise above 55 points thresholds by the end of Q4 2023.
“Average capacity utilization will still hover around the 50 percent threshold as the forex-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year. The sector may experience a meagre improvement in manufacturing output as forex and interest rates-related challenges are expected to subside from the third quarter.
He added, “The ongoing concessions of seaports, airports and roads may also provide opportunities for the cement sub-sector and contribute to infrastructure upgrade needed to enhance manufacturing productivity.
He stated, “The ongoing tax reforms and the envisaged bank recapitalization will frontally address the challenges of multiple taxation and poor access to credit that have continued to limit manufacturing sector performance, if successfully implemented.
Delving into the Electricity sector, MAN said, “Expect dynamic implementation of the Electricity Act 2023, which will increase private investment in renewable energy, enhance energy efficiency and improve electricity supply to the manufacturing sector.
“The improved electricity supply will ameliorate the issue of inadequacy, reduce the disruptions occasioned by frequent outages and in turn improve energy security.
To improve the sector in the year, we recommend: “Expend cost saving from fuel subsidy to deploy a bouquet of production focused policies, backed with more structural measures to combat the peculiar inflationary pressures from insecurity, energy and transport cost”, and, “Overhaul the power sector and incentive investment in renewables to boost electricity generation and promote energy-cost efficiency.”
“Government should lead by example and give priority to patronage of made-in-Nigeria product in all its purchases and for all government contracts and projects.
“Government should mandatorily upscale patronage of made in Nigeria products by deliberately reducing the excessive reliance of the country on imported products.
“The three tiers of Government should enforce the implementation of the Executive Order 003 in same for their ministries, departments and agencies.
“Government should encourage local sourcing of raw materials through comprehensive and integrated incentives to address the challenges of low productivity and imported inflation,”. Ajayi-Kadir said.
(Vanguard)
