Mohammed Shosanya

The Manufacturers Association of Nigeria (MAN) says the recent petrol price hike will force Small and medium-sized enterprises (SMEs) to close shop if they are unable to pass on the additional costs to consumers.

Businesses may need to adjust their pricing strategies, which could lead to reduced profit margins if consumer demand weakens on account of the increase in price from ₦568 per litre to ₦855 per litre,the association said.

According to MAN’s Director- General, Segun Ajayi-Kadir, the poor state of the nation’s refineries, which are not producing petroleum products, and the sharp decline in the value of the Naira, will further exacerbate the situation.

The association predicts that the increase in petrol price will lead to higher transportation costs, increased prices of goods and services, and reduced disposable income for consumers.

This will result in reduced demand for non-essential goods and services, affecting businesses across various sectors.

The situation may also lead to a rise in inflation figures, impacting household budgets and deepening the already lackluster performance of the manufacturing sector.

The association warns that the increased costs will add to production input and logistics costs, leading to higher prices and reduced consumer demand.

This may result in unplanned inventory rising, reduction in capacity utilization, and negatively impacted manufacturing performance.

The association urges policymakers to consider the potential consequences of the petrol price hike and explore measures to mitigate its impacts on the economy and the manufacturing sector.

Mohammed Shosanya

The Nigerian Economic Summit Group (NESG),has advocated the need for the revitalisation of Nigeria’s manufacturing sector.

The group expressed this at a pre-summit webinar ahead of the 30th Nigerian Economic Summit, focusing on the theme: “Reversing the Decline: Strategies for Stabilising Nigeria’s Manufacturing Sector.”

The event gathered key stakeholders to discuss solutions for halting the decline in Nigeria’s manufacturing industry and examining how current economic reforms impact the sector’s operations.

Speaking,Dr. Muda Yusuf, Thematic Lead of the Manufacturing Group, who represented Engr. Mansur Ahmed, Private Sector Co-Chair of the Manufacturing and Mining Policy Commission (MMPC) Steering Committee, highlighted the significant role of the manufacturing sector in Nigeria’s development.

According to him,despite its potential, the manufacturing sector faces numerous challenges such as inadequate infrastructure, fluctuating exchange rates, and poor access to finance.

He emphasised the import of industrialisation in driving economic growth, as seen in Europe and North America, and stressed the need for a thriving manufacturing sector supported by innovation, infrastructure, and strong economic policies.

In his remarks,Mr. Olakunle Alake, Vice President of Dangote Industries Limited and NESG Board member, said that Nigeria’s manufacturing sector, which contributes only 8% to the Gross Domestic Product faces stagnation due to issues like erratic power supply and inadequate infrastructure.

He stressed the need for collaboration between the public and private sectors to develop policies that stabilise and rejuvenate the sector.

He also noted that prioritising Sustainable Development Goal (SDG) 9, which focuses on building resilient infrastructure and fostering innovation, is crucial for achieving broader economic and social goals.

Lumun Amanda Feese, Facilitator of the Manufacturing and Mining Policy Commission, delivered a presentation on “Re-imaging Industrialisation: Leveraging Nigeria’s Natural Resources to Accelerate Industrialisation.”

Feese suggested that Nigeria could learn from countries like Sweden, Finland, Australia, and the USA, which have successfully used their natural resources to drive industrialisation through innovation and technology.

She underscored the need for robust public-private partnerships and collaboration among stakeholders to ensure the sector’s growth.

Soromidayo George, Director of Corporate Affairs and Sustainability at Coca-Cola Hellenic Bottling Company Plc and Chairman of the Non-Alcoholic Drinks Sector of the Manufacturers Association of Nigeria, discussed the impact of recent economic reforms on the Fast-Moving Consumer Goods (FMCG) industry.

She highlighted the sector’s potential to reduce poverty by creating jobs and promoting economic diversification.

She advocated the urgency of implementing effective strategies and policies that align with Nigeria’s cultural context and are backed by data.

Chijioke Uwaegbute, Partner & Tax Leader at PwC Nigeria, offered strategic recommendations to stabilise the manufacturing industry.

He advocated a temporary freeze on increasing levies and tax rates for one to two years to help the sector recover.

He also called for simplifying processes for accessing export expansion grants and other incentives, noting that some manufacturers currently face tax rates as high as 45%.

Afolabi Olorode, Acting Managing Director of FBN Quest Merchant Bank, spoke about enhancing financial resilience to mitigate risks associated with foreign exchange volatility, scarcity, and inflation.

He stressed the importance of better capitalisation for manufacturing companies to balance debt pressures and suggested that Nigeria’s relatively low labour costs offer an opportunity to develop a skilled workforce in technical production and manufacturing.

Mohammed Shosanya

The Senate Committee on Solid Minerals faulted the lack of a will by the Ministry of Steel (Supervising agency) to make the Ajaokuta Company Limited to work.

At a public hearing on Tuesday in Abuja, the committee lamented that even after about four decades and several attempts at revamping it, the complex has failed to work.

Chairman of the Ad-hoc committee, Senator Adeniyi Ayodele Adegbonmire (SAN) wondered how Ajaokuta will ever work when the Ministry of Steel, which directly supervises Ajaokuta presented only “a 2-page watery memorandum” to the Senate committee saddled with the enormous job.

“How can Ajaokuta work? You have not presented something that will make Ajaokuta work. Tell us the problem and the steps you have taken to make Ajaokuta work. What you presented shows the ministry is not on top of the situation.

The upper chamber was also told that the privatisation and concession of the company was not in the best interest of the country.

The concession agreement between the Federal Government and GINL provided for GINL to import capital into the company but didn’t bring a dime.

Nigeria paid a whopping sum of $496 million to Global Infrastructure Nigeria Limited (GINL), the company Ajaokuta was concessioned to as out of court settlement.

This infuriated the Senate investigative panel when it was clear that GINL did not bring in a dime as investment.

The Central Bank of Nigeria (CBN) represented by Hamisu Abdullahi, Director Banking Services presented evidence of payment of $496 million to GINL with a mandate from the office of the Accountant General of the Federation.

He said the source of the money was FGN independent revenue account from where$250 million in settlement agreement was paid in September 2022 and the balance paid from FGN Bonus Account in installments $49.32 million.

Mr. Abdullahi confirmed that there was no capital importation by GINL.

The Sole Administrator of Ajaokuta, Engr. Sumaila Abdul Akaba who described ASCOL as a strategic company said the state of the plant is still intact.

Engr. Akaba told the committee that the line plant, which has been completed and will be ready in 6 months, can meet the lime needs of the 36 states.

The Sole Administrator faulted the notion in many quarters that ASCOL is obsolete by saying that all the steel companies in India and China are built by this Russian technology like Ajaokuta.

Engr. Akaba also justified the retention of staff of the steel company and the N4.2 billion in the 2024 budget for salaries which Senator Natasha Akpoti-Uduaghan (Kogi Central) criticized.

He said those staff who are maintaining the plant are the only reason “we still have what we call Ajaokuta today”.

Mohammed Shosanya, Babatunde Solanke

The Organised Private Sector of Nigeria (OPSN),has reiterated the need for dialogue and engagement between the government and concerned citizens to stave off the hardship and rising inflation in the country.

The group expressed this in a joint statement signed by the Nigeria Employers’ Consultative Association (NECA), Nigeria Association of Small and Medium Enterprises (NASME), and Nigerian Association of Small Scale Industrialists (NASSI), Manufacturers Association of Nigeria (MAN), Nigerian Association of Chambers of Commerce Industry Mines and Agriculture (NACCIMA), Nigeria Employers’ Consultative Association (NECA), Nigeria Association of Small and Medium Enterprises (NASME) and Nigerian Association of Small Scale Industrialists (NASSI).

The group said,it has carefully considered the planned protest by certain citizens in response to current challenges affecting public welfare.

The OPSN,it said it prioritises the importance of dialogue and engagement between the government and concerned citizens on the strength of its apolitical nature.

It said,open and constructive dialogue is the most effective tool for addressing the nation’s challenges and encouraging the desired changes.

It said:”We urge all parties to embrace this path of dialogue to achieve meaningful and lasting solutions for the benefit of our country. “However, should the decision to protest be made, we earnestly appeal for it to be conducted in a peaceful and orderly atmosphere.

“A peaceful protest will ensure that citizens can express their concerns without infringing upon the rights of others or disrupting legal and lawful activities. It will also allow the government to respond appropriately and facilitate a productive engagement that could lead to future collaboration on the outcomes of such engagements.

“As representatives of the business community, we are acutely aware of the potential economic impact of mass protests. Our members are crucial drivers of economic growth and job creation; therefore, any disruption to business operations could have significant repercussions on the economy and the livelihoods of the people.”

Mohammed Shosanya

The Manufacturers Association of Nigeria, MAN, has expressed disgust over the continuous increase in the country’s Monetary Policy Rate, saying the development will collapse manufacturing sector.

Segun Ajayi-Kadir,Director General of MAN,in a statement on Wednesday,said the development will escalate production costs and consequently the prices of finished goods, with consequential effect on unemployment and social instability. It will further compound the prevailing low consumer demand, capacity utilization and profitability.

According to him,it will stifle capacity to make new and further investments, innovation and curtail opportunities for the growth.

He said,the development will constrained the capacity of the sector to compete effectively in regional and global markets, and if unchecked, may trigger critical distress of more manufacturing concerns.

He also said the hike in interest rate,will constrain reinvestment for expansion and introduction of new brands, as significant portion of revenue of manufacturing concerns is directed towards interest payments.

It will further restrain access to capital, judging from the fact that only 16% of total commercial bank credit was disbursed to the manufacturing sector in the first quarter of the year.

He said,it will reduce the flow of investments into the sector and funds required for retooling, upgrading facilities and procurement of new technologies.

“It is noteworthy to state that the worrisome trend occasioned by increase in cost of borrowing is corroborated by the report of NBS, to the effect that manufacturing investment declined significantly in the second quarter of the year.

“This drop underscores the critical link between domestic investment confidence and foreign investor sentiment. In addition, the share of manufactured exports in non-oil exports also declined from 21.4% in Q4 2023 to 15.1% in Q1 2024”