Consumer prices may rise further as raw materials’ stock dry up
With an imminent decline in their stocked raw materials, arising from inability to access some imported raw materials used for local production, Nigerian manufacturers have projected a continued rise in consumer prices within the first quarter of the year.
According to the Manufacturers Association of Nigeria (MAN), in its latest review of activities in the sector, many industrialists may run out of stock of some raw materials used for production by the end of first quarter of 2016, as access to foreign exchange remains limited.
Specifically, MAN President, Dr. Frank Jacobs, at a yearly luncheon with the media on Wednesday, noted that about 680 HS codes were identified following the breakdown and classification of the 41 restricted items by the Central Bank of Nigeria (CBN) from the official forex window into HS codes.
Of the 680 HS codes, Jacobs explained that 95 HS codes are raw materials used in the course of production in the factories and they are presently restricted from access to forex market.
While the CBN might have made pronouncement unveiling its resolve to give priority to some of the HS classified products, manufacturers believe the order of priority needs to be addressed urgently as there are outstanding requests to meet local production needs.
“We have appealed to the CBN to remove those items from the list and if that had been done, we would have been shouting for joy because the rest of the 585 items will be to the benefit of the country because if those items are not imported; it will be better for the economy,” he said.
Indeed, MAN also called on Nigerians to brace up for a very difficult time going forward in the year, stating that the nation is transiting from what it calls a disorganised system to a more organised system and would require sacrifices on the part of every Nigerian to get the country back on track.
Jacobs explained that Nigeria had been living in a fool’s paradise for a very long time with no economic development despite all the proceeds it got from crude oil, pointing out that the economic situation is only going to get much worse until the nation starts making concrete and sustainable developmental steps in adjusting the economy.
The MAN boss said: “The situation is going to get worse before it gets better, but our prayer is that things do not get worst for long. We believe by the third quarter of 2016, things will begin to improve.”
He however, stated that the association is totally against the proposed plan by the federal government to increase Value Added Tax (VAT) in the country
“No doubt Nigeria is the only country in West Africa paying the least amount of VAT, but the country is plagued with lots of challenges and MAN will not support the increase of the VAT rate at this time. It is our hope and prayer that the federal government does not increase VAT at this time,” he said.
He said the current MPR at 11 per cent by the apex bank is still high, pointing out that the only way Nigeria can diversify the economy is when interest rates charged to manufacturers come in the region of three to five per cent.
In his words: “Anything higher than that, the sector will not thrive coupled with the high cost of operation in the country. There is nothing we can do since CBN has taken that decision but we do not think it is in the best interest of the country.”
He said as for the devaluation of the naira, MAN had always advocated for what it calls a guided devaluation by the CBN, saying that CBN should be able to put boundaries through which the naira can be devalued instead of the free fall it is currently experiencing.
According to him, in the last one year, the association engaged government at all levels including ministries, departments and agencies on a number of issues affecting the manufacturing sector and the Nigerian economy, noting that some of the issues advocated on were resolved while others are currently being addressed.
He said the association in broad terms has recorded remarkable advocacy successes by strengthening MAN’s cooperation and collaboration with government agencies, improving the implementation of the Pre-Arrival Assessment Report (PAAR) implementation process in conjunction with the Nigeria Customs Service, advocating for the removal of the monthly exorbitant fixed charges collected from electricity users by Discos, the non-reflection in MYTO 2.1, the downward review of electricity bills for Small and Medium Industries (SMIs) in particular and prorating of electricity charges to consumption.
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1 Comments
what effort has being made to source those required raw material locally. That is the goal of the Central bank effort, which should be supported. importing everything under the sun has cause our reserves to be depleted and our economy to inflated with imported price. Yes there would be some hardship, however this might forces Nigeria to source raw material locally and patronize locally made finished goods. CBN has done its job, now it is time for the government and all MDA to do their part in making import very expensive and increase demand for local product.
We will review and take appropriate action.