• Stakeholders’ Engagement Critical For Manufacturing Sector’s Survival — Yusuf• High Cost Of Raw Materials, Energy Wiping Our Profits, Says FOBTOBDespite the four Executive Orders on tax signed by the President during the week, they spoke in unison that more needs to be done urgently for their businesses to be saved from failing.
For instance, a good number of manufacturers and MSMEs operators have lamented the huge amount of funds, unplanned for, but which they have had to deploy to stay afloat since the removal of fuel subsidy. They noted that rising inflation and the high cost of energy to run their plants had tripled the cost of operations.
A 2020 survey report by PwC estimated the financing gap for Nigerian MSMEs to be about N617.3 billion yearly. Many manufacturing firms have low local value addition, weak backward integration, inadequate forward integration, and low job creation potentials. All of these have consistently weakened the impact of the sector on the economy and the development process.
With the removal of fuel subsidy and with the reforms in the foreign exchange sector, small business owners have also reported losses and setbacks in their operations. According to him, the resultant effect of government’s many actions is already manifesting in increases in the prices of goods and commodities.
He added that diversification of businesses should be embraced at all costs, while value addition and creative packaging/branding should be considered in improving the sales of products/services. The Director-General of the Nigeria Employers’ Consultative Association , Adewale-Smatt Oyerinde, on his part, noted that for businesses to stay afloat amid high energy costs, the government should quickly address the regulatory environment, which he identifies as a factor that could derail the progress that is being made.
To further cushion the effect of the subsidy on businesses, the Chief Executive Officer of the Centre for Promotion of Private Enterprise, , Dr. Muda Yusuf, said that the government needed to urgently engage with manufacturers so that details of the desired interventions could be discussed. Yusuf stressed the need for government to intervene on how to bring down energy costs by putting the cost of gas businesses use at a more reasonable value and for government to review the cost of gas being charged in dollars.
For MSMEs, the CPPE boss canvassed the establishment of industrial clusters supported by the government with some infrastructure. “We have been talking about the many problems why this sector remains stagnant and what the government can do, especially during these difficult times. Asides from the weak infrastructural base of power, transportation, Apapa traffic issues, railway system, and congested ports, there is also the high cost of funds, absence of long-term funds, challenges of access to credit by SMEs as well as other firms in the sector, because of the perception that manufacturing is very risky in the economy.
For the National President of the Food, Beverage, and Tobacco Senior Staff Association , Jimoh Oyibo, the government must grant the sector tax holiday so that what befell the textile sector will not affect them. He said this would enable the sector to gather more strength with which to keep the companies afloat.