Forex restriction: MAN explores local raw materials’ sourcing
As part of measures to salvage their foreign exchange earnings following the restriction placed on some items by the Central Bank of Nigeria (CBN) from its official window, the Manufacturers Association of Nigeria (MAN) has urged its members to explore opportunities in sourcing raw materials locally in order to address production challenges.
Indeed, MAN noted that local sourcing of raw materials as an alternative for foreign inputs for local production will further help to reduce pressure on the demand for foreign exchange in the country.
MAN President, Dr. Frank Jacobs, noted that with the CBN maintaining its stance on the forex policy, manufacturers need to consider available options in addressing the challenges adding that the association had objected to the restriction and expects a review of the policy in the near future.
The MAN President during the yearly general meeting of MAN Apapa branch, said given the challenges manufacturers are experiencing currently, there is a need for manufacturers to pay greater attention to local sourcing of raw materials and to tune-up to the government agenda of backward integration.
“This action is indicative of the policy orientation of government and its aversion towards the importation of otherwise locally available inputs and items. This means that the time for the increased local sourcing of our raw materials has come. MAN is in support of this proposition and going forward, local sourcing of raw materials should be our first consideration,” he added.
Jacobs said the theme of the meeting, “The Nigerian manufacturing sector: What future for capacity utilisation and growth under a new economic situation” is topical and apt, pointing out that idle capacity and unimpressive growth pattern has remained a recurring decimal in the manufacturing sector.
He added that the marginal improvement in power supply witnessed in recent times is fraught with a lot of discomforting developments, saying that the emergence of distribution nationwide did not seem to provide the anticipated reprieve.
“We are still contending with inadequate and poor supply; high tariff, including fixed charges; arbitrary and startling increase in tariff rate; unwanted disconnections and the likes,” he said.
The MAN President added that despite its best endeavours and cooperation of the federal government, the sector has continued to experience a high incidence of multiple taxation and the use of unorthodox methods to extract taxes, fees and levies that are often times not legitimate, from manufacturers at state levels.
He said another disturbing development that stares manufacturers as well as other Nigerians and indeed other States, is the imminent danger of flooding with the opening of the Cameroon dam.
“On our own part, we have drawn the attention of the relevant federal government agencies to this looming disaster and are following up on steps that would be taken to avert it. We therefore, call on state governments to activate their official channels for the prevention and remediation of this imminent calamity,” he said.
In his remarks, the Chairman, MAN Apapa Branch, Folaranmi Odunayo, said 2014 and 2015 have remained a challenge for manufacturers, saying that the decline at the international market of crude oil prices, the commodity on which Nigeria mainly depends for revenue, led to the devaluation of the Naira.
He said the demand level for manufactured goods has nose-dived as State government’s become increasingly unable to pay workers salary, stressing that the federally generated revenue has declined by about 66.7 per cent just as allocations to State government’s have similarly declined.
He pointed out that the manufacturing sector of the Nigerian economy has been greatly threatened in recent times, warning that if nothing is done to address the problems, the sector which has taken time to build could be eroded away.
“The sector at the end of 2014 and so far in 2015 has performed poorly. This is attributed to higher operational costs brought about by some unfavourable fiscal and monetary policies of the federal government.
Also speaking at the event, the Commissioner for Commerce, Industry and Cooperatives, Lagos State, Prince Rotimi Ogunlesi, said going by the CBN’s second quarter economic report, industrial production declined during the second quarter of 2015 by 5.9 and 6.6 percent below the same levels in the preceding quarter of 2015 and the corresponding quarter of 2014.
He added that capacity utilisation at 59.5 percent also fell by 1 percent point below the level in the preceding quarter, pointing out the decline was attributed to the lower level of activities in the power sector.