Manufacturers Association Of Nigeria’s Expectations from President Buhari’s Successor

A change in administration is usually greeted with expectations, particularly when it was preceded by electioneering campaigns when promises are made by the candidates of the various political parties. Even though MAN is an advocacy group and apolitical, we have expectations from the incoming government and look forward to working with them to accelerate the economic development of Nigeria, particularly the manufacturing sector. This is more reason why MAN’s blueprint for the accelerated development of manufacturing in Nigeria was widely circulated to the leading political parties during the campaign season.

The assumption is that the new government will move swiftly to fulfill those promises they made and thereby justify the confidence reposed by the electorate. This is the essence of the social contract and in a democratic society, the government is expected to be accountable to the people and deliver on the promises made.

What manufacturers want

Our expectations, as manufacturers, are coming against the backdrop of a reduction in the Manufacturers CEO Confidence Index (MCCI) in the last quarter of 2022. As you are aware, the MCCI is a quarterly survey of MAN to gauge the pulse of the operators and trends in the manufacturing sector. We mirror their response to the movement in the macro economy and government policies using primary data that is mined through a direct survey of 400 CEOs. We observe diffusing factors like current business conditions and business conditions for the next three months; current employment conditions and employment conditions for the next three months; and current production levels and production levels for the next three months. In the latest survey for the fourth quarter of 2022, the aggregate index score declined from 55.4 points in Q3 2022 to 55.0 in Q4 2022. This shows that CEOs of manufacturing industries have less confidence in the economy.

Consequently, we have expectations, especially now that the first phase of the elections has come and gone. To start with, we should expect that the transition should take place in a peaceful atmosphere and all the contestations should follow established and legal processes.

We can then talk of a smooth and effective transfer of governance and handover to the new administration. Effective in terms of ensuring that the transition committee works well with the incoming team and the new administration is able to hit the ground running. So, we should expect that there is minimal downtime in governance. Seeing that the new administration settles down and makes the needed appointments in good time and selecting the right people.

Now to the real issues, the overarching priorities are security and the economy. Since the Association’s area of interest is the economy, I will dwell more on that.

I think that there should be a realization that the economy is in a parlous state and needs a quick rejig. We need to reset our priorities and stop the hemorrhage.

Let us take a look at the key economic indicators: The inflation rate is 21.82% and the Naira exchanges for the Dollar officially at N460 and on the streets, which is by far the most patronized by economic actors is about N750. On interest rate, the MPR is 17.5%, while the lending rate is 27.63%, to most manufacturers, the latter is the norm.

We have unemployment, which is prevalent amongst the youth at 33.3%, even as the GDP annual growth rate is about 3.52%. Today, government debt to GDP ratio is 37% from 34.5% last year. The latest addition that is disrupting the economy in a profound manner is the redesign of the national currency and the attendant scarcity, an otherwise excellent monetary control measure by the CBN, but for the inexplicable poor management of the transition process. So, if the problem lingers, the new administration should swiftly address it, without throwing away the baby with the bath water.

There is also the evident inadequacy of needed infrastructure and the myriad of macroeconomic challenges that has constituted binding constraints to the performance of the economy

With this background, the new government should not be under any illusion about the need to stop the drift and hit the ground

There are low-hanging fruits, there is also the long-term perspective for stabilizing and growing the economy.

I would suggest that the President, when sworn in, should set specific deliverables to be accomplished within the first 100 days in office. A must-do list within the 1st 100 days after the swearing-in. And I will offer suggestions on those issues:

1. Permanently resolve the lingering difficulties with the currency transition if it has not been completely addressed by the outgoing government. As already indicated, this has resulted in a more than 25% dip in sales of manufactured products.
2. Direct the CBN and ensure that it complies with the prioritization of foreign exchange to the productive sector, particularly to manufacturers to import raw materials, spares, and machinery that are not locally available. And taking immediate and time-bound steps to achieve the unification of the foreign exchange windows.
3. Direct the NERC to admit all qualified applicant companies into the Eligible Customer Scheme in order to allow them access to power as stipulated in the Electric Power Sector Reform Act 2005.
4. Direct all relevant agencies of government to ensure that the electronic call-up system at ports aimed at redressing the congestion works without fail.
5. Ensure that the Finance Bill 2022, if not assented to before the transition, includes the critical inputs of the organized private sector. In particular, the jettisoning of the highly objectionable removal of the 10% investment allowance on the acquisition of plants & machinery (in the Company Income-tax Act, section 32). Additionally, to ensure that the imposition of the 0.5% levy on eligible imports from third countries is limited to goods that we have capacity to produce locally and quite importantly, exclude raw materials that are not locally available.  The input of the organized private sector on the CEMA bill should also be taken on board before the amendment bill is signed into law.
6. Take a definite stand by ordering the removal of fuel subsidy. The decision should be outright and immediate steps should be taken to commence removal.
7. Announce a special policy initiative to address the revival of closed and distressed industries, particularly in the northeast where 60% of our member companies have closed.
8. Craft and announce a special policy initiative to leverage diaspora expertise and investment to address evident gaps and help to boost the performance of the economy.
9. Direct all ministries, departments, and agencies of government to unfailingly comply with Executive Order 003 on the patronage of made-in-Nigeria products. In this regard, there should be a strict application of the margin of preference, effective monitoring and periodic evaluation of compliance,` and appropriate sanctions meted out to MDAs acting in breach of the executive order.
10. Announce a special policy initiative to de-risk manufacturing and unleash adequate funding for the sector through effective funding of special lending windows.

The Association is desirous to see all recommendations implemented by the new administration. We believe that if the prosperity of Nigeria is paramount, then the productive sector should be given maximum priority for the general good of all in terms of wealth and job creation for the Nation.

       Segun Ajayi-Kadir,mni, Director General, MAN