From BLESSING OKEZIE, Lagos
Against the backdrop of persistent lackluster performance of the manufacturing sector occasioned by numerous challenges confronting the sector, the manufacturers Association of Nigeria (MAN) has called for a comprehensive and integrated support system from federal government .
MAN President, Mansur Ahmed, at the virtual 48 Annual General Meeting of the association held in Lagos, said this support system could come in the area of reduction in the financial pressure on member companies occasioned by COVID-19 through compensation of manufacturing concerns that are forced to shut down with 60 percent of their employees’ salaries for at least three months to prevent laying offs of employees and massive unemployment; support to manufacturing concerns with existing loan facilities by reviewing the terms, especially reducing interest rates to five percent with two years moratorium.
MAN also requested that manufacturers that are investing in order to scale up production should be granted loans at five percent interest rate for a period of five to seven years.
According to the MAN president, this will no doubt improve liquidity and ramp up productivity in the manufacturing sector in a manner that will cover up for obvious losses due to COVID-19.
Ahmed, also said government should prevail on the Central Bank of Nigeria (CBN) to extend its COVID-19 stimulus packages to manufacturers not covered by existing CBN initiatives.
In his words: “The CBN should also grant manufacturers increased access to foreign exchange at pre-COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally.
“Introduce fiscal measures by waiving import duties on active pharmaceutical ingredients (APIs), other essential products and food related raw materials for one-year effective April 2020;
“Extend timelines for filing and paying taxes (including excise duty with a provision that it should be based on sales and not production) by six months after the economy returns to normalcy.”
Ahmed, also wants government to reverse the Value Added Tax rate back to the pre-2020 Finance Act rate and reduce the Personal Income Tax to a flat rate of 10 percent for one-year effective April 2020.
According to him, this will improve the disposable income of Nigerian workers, stimulate consumption, promote an upsurge in demand and increase production output.
He further said government should direct all regulatory agencies, especially Standards Organisations of Nigeria (SON), National Agency for Food and Drugs Administration & Control (NAFDAC) to reduce their respective administrative charges (Pre-COVID-19 rates) payable by manufacturing concerns by 50 percent.
He said government should direct the Nigeria Customs Service, the Nigerian Ports Authority and other related agencies of government to treat all requests from Manufacturers expeditiously with great sense of responsibility and understanding of the prevailing situation.
He said: “As a matter of urgency, direct that cargoes containing manufacturing raw materials are cleared swiftly and ensure compliance with additional free days from the terminal and shipping lines to clear the containers to avoid demurrages as already announced.
“Grant manufacturers waivers from all demurrages payable between February and July 2020, especially those occasioned by the lockdown directives of government and others.”
The MAN president, highlighted some of the challenges that have mostly impacted manufacturing concerns saying manufacturers are increasingly finding it difficult to source foreign exchange for the importation of raw materials, machinery and spares that are not available locally;
Other challenges according to him are “Inventory of unsold finished manufactured products has risen to an all-time high of about N402.4 Billion confirming the reality that the disposable income of the consumers has been grossly eroded;
“Manufacturers are still inundated with numerous, oftentimes duplication of demands from the tiers of government in form of taxes, levies, fees, permits, etc;
“Manufacturing companies are continually overwhelmed with multiple regulations from different regulatory agencies and excessive drive for revenue by government agencies;
“Dearth of trade facilitation infrastructure, poor access to the nation’s sea ports and longer turnaround time for clearance of cargo collectively stifle the smooth operations of manufacturing concerns”, he said.
Ahmed, also highlighted inadequate electricity supply and incessant increases in tariff without commensurate improvement in generation, transmission and distribution, saying it has remained key challenges;
According to him, the manufacturing sector spent over N67.38billion on self-generated electricity with energy cost accounting for over 38 percent of production cost in 2019; and genuine exporters are still being owed huge sums of money as backlog of unpaid outstanding from the Export Expansion Grant scheme.
