As prevailing economic challenges undermine investments and disposable incomes, local manufacturers have expressed concerns about the loss of investments to neighbouring African countries.
The Senior Partner, Delloite Nigeria, Mr. Bernard Orji, during the 50th yearly meeting of the MAN, Apapa Branch in Lagos, stated that the prevailing challenges in the operating environment are undermining the growth of the real sector.
According to him, the high level of insecurity in the country is a major bottleneck hindering the growth of the sector, pointing out that insecurity would persist as long as the country keeps recording high unemployment levels.
“The insecurity has aggravated the situation and until we solve the issue of poverty, the situation will persist. Foreign Direct Investments (FDIs) have slowed down as Ghana is being targeted as the next destination for FDIs. Investors have lost confidence in investing in the country due to the high level of insecurity.
“We are currently operating in a harsh terrain with unstable power supply, poor accessible road networks, multiple taxation, lack of access to funds from financial institutions, as well as the cost of production, are enough to dampen the hopes of manufacturers as the poverty level has never moved. Manufacturers must focus on the needs and not wants of consumers because of their low purchasing power,” he added.
He however urged manufacturers to be resilient to meet their forex needs, warning that the challenge of sourcing for foreign exchange would linger as the Federal Government is yet to address the scarcity of foreign exchange.
“We do not see the government addressing this issue in the nearest future because it is tied to different factors. We see this problem to continue and I will advise you not to depend on the federal government for forex. There is no unified exchange rate system in place,” he said.
The Chairman, MAN Apapa Branch, Frank Ike Onyebu, said the manufacturing sector which has which has the potential of contributing more than 25 per cent to Nigeria’s GDP, is currently doing less than 10 per cent.
He added that the contraction in the activities of the sector as a whole is attributable to a myriad of factors including infrastructural deficiency, insecurity, global and domestic supply chain disruptions, foreign exchange liquidity, weak consumer spending and high operating costs.
He added that subdued operations caused by the lockdown and other containment measures to combat the pandemic also affected manufacturing activities.
According to him, advocacy is ongoing with the State government on the indiscriminate imposition of effluent discharge tariff on members, adding that rates are also being negotiated.
He said the theme of the 50th annual general meeting tagged “Current economic challenges: Way forward for Nigerian manufacturers” was designed to address the challenges encountered by its members as well proffer solutions, stressing that the manufacturing sector and indeed other sectors of the Nigerian economy have not fared well in recent times.
He pointed out that the poor state of infrastructure in Nigeria is the single most devastating challenge of the sector, adding that dilapidated road networks, unstable electricity supply, decrepit port infrastructure have contributed immensely to the high cost of production which has made Nigerian manufactured products mostly uncompetitive.
On his part, the president, MAN, Mansur Ahmed, said the sector contributing less than 10 per cent to the GDP is indeed most undesirable considering the fact that the manufacturing sector is undoubtedly the bedrock of any thriving economy and the major provider of employment and economic growth opportunities.
He appealed to the Lagos State government to step up the level of support for manufacturers by deliberately enhancing the operating environment for existing and prospective industries to thrive, noting that this would enable the sector to make a greater contribution to the State’s economy in particular and the Nigerian economy at large.