How FX challenges affects manufacturing sector - DG, MAN

• The Nigerian Manufacturers Association has revealed how the government is supporting the industry with accessible loans
• This is in consideration of the macroeconomic difficulties brought on by the fluctuations in foreign exchange rates
• According to the MAN DG, one of the government's primary forms of assistance is the credit set aside specifically for the industry

The Manufacturer Association of Nigeria (MAN) has disclosed how the government is providing affordable credit to support the sector given the numerous challenges businesses face in the country.

According to the MAN DG, one type of fundamental government assistance is the credit designated for the industry. Photo Credit: FG Trade
Source: Getty Images

Ajaji Kadir, Director General and CEO of MAN, said this is in light of the macroeconomic challenges due to the volatility in foreign exchange rates at the Norrenberger Economic Outlook titled, "Nigeria: Beyond the reforms"

He pointed out that the manufacturing sector has been affected by different logistics flows as it is one of the most susceptible to international shocks and geopolitics.

According to Kadir, the recent government reforms have impacted the sector, considered as one of the most important to the economy. In Nigeria, the manufacturing sector contributes less than 10%, and it is growing at about 1.5%.

He said,

“We have seen a 250% hike in electricity prices. For an average manufacturer, the cost of electricity is between 28% and 40%, depending on how power-intensive you are.“So if you have a 250% increase, in such an area, imagine what that would be. This is in addition to the inflation that has eaten deep into the pockets of average Nigeria.”

How FG is addressing the challenges

The MAN DG said that one form of basic government support is the credit earmarked for the sector.

He said that this would go a long way given that the interest rate for an average manufacturer currently stands at 31% to 36% and is likely to escalate with the recent increase.

He said,

“Our proposition is that the credit is given through BOI because subjecting it to any rate higher than 9% is what we anticipate and that there should be no hidden charges. We are optimistic that if this is taken along with government and infrastructure and if the fiscal policy and tax reform committee of the federal government is allowed to kick in (We are at the implementation phase), all of it will support the second part of the year better performance for manufacturing sector.”

Abimbola Babalola, head, trading and product, Nigerian Exchange Limited said that the government's efforts to implement reforms across different parts of the market serve as an important signal for foreign investment.

“Before this regime, foreign portfolio investment contributions accounted for about 9.1% of the volume and value in our market. But year to date, they have accounted for over 20% of that.”

Manufacturers react to FG’s suspension of sugar tax

Legit.ng reported that stakeholders and manufacturers in Nigeria have praised the Nigerian government’s decision to suspend the proposed increases in tax on Sugar-Sweetened Beverages (SSBs), describing the move as a lifeline for the sector.

They said this decision would reignite manufacturing growth and job creation in the industry.

The minister of finance and coordinating minister of the economy, Wale Edun, disclosed the government’s intention to stabilise the economy when the National Action on Sugar Reduction (NASR), a coalition of non-governmental organisations, visited him in Abuja.

Source: Legit.ng