By Bimbola Oyesola
The preferential foreign exchange allocation approved for the Manufacturers Association of Nigeria (MAN), by the Central Bank of Nigeria (CBN), has raised its membership by additional 415 firms in the last two years. The leadership of the association told Daily Sun that the decision of the nation’s apex bank to allocate 60 percent of available foreign exchange to the real sector and the ease of doing business initiative spearheaded by the Federal Government have combined to bolster manufacturing capacity utilisation in the economy to a record high of 59.18 percent in the second half of 2016 despite the harsh effects of the economic recession that engulfed the nation.
President of MAN, Mr Frank Jacobs, who revealed these statistics recently, said the decision of the CBN to allocate 60 percent of available foreign exchange to the real sector turned out to be a game changer that raised its membership strength by another 415 new members in the last two years.
The man boss who described the development as an indication that the Nigerian economy remains attractive to the global business community, also complimented the Ease of Doing Business initiative of the Federal Government which aims at improving business infrastructures in the economy.
He said “Even though the preferential FX allocation was removed vide the FX policy of February 21, 2017, the CBN has promised to continue to accord the manufacturing sector strong priority in FX allocation.
Jacobs admitted that the preferential FX allocation regime has brought back life to the real sector as manufacturing activities were galvanised to improved performance in the first half of the year.
According to MAN surveys, capacity utilisation rose to 59.18 percent in the second half of 2016 from 49.64 percent in the corresponding period of 2015 and 44.3 per cent in first half of 2016.
Similarly, local raw-materials utilisation increased to 59.98 percent in the second half of 2016 from 51.88per cent of the same half of 2015 and 46.3 percent recorded in the first half of 2016.”
The MAN President explained further that as a result of the increases in capacity utilisation and local sourcing of raw-materials, manufacturing production also surged to N5.02 trillion in the second half of the same year from N4.21 trillion in the same periods in 2015 and N3.76 trillion recorded in the first half of 2016.
Jacobs said the establishment of the Presidential Enabling Business Environment Council (PEBEC) with the mandate to improve the Ease of Doing Business (EOBD) in the country has the potential to further improve the performance of the manufacturing sector.
MAN had earlier commended the government for its quest to create friendlier operating environment for manufacturers through the instrumentality of ease of doing business support framework.
The MAN helmsman opined that a beneficial support system of that kind was very good for the development and growth of the economy.
He stated, “The performance score card of PEBEC indicates that its seven points objectives set in line with the World Bank Indices of Ease of Doing Business (EODB) have been achieved.
According to him, there have been visible improvement in the ease of company registration now being facilitated through a web portal, removal of all trade facilitation constraints, foreign capital inflow, the implementation of some aspect of Single Windows ports operations among others.
Though a cursory assessment and verification of the performance score card of the Presidential Enabling Business Environment Council (PEBEC) reveal it recorded a low score of 33 percent in one of the six pillars of EODB, the Organised Private Sector believes that the operating environment can be further improved if government ensures that other aspects of the EODB objectives currently considered Work-In-Progress are properly implemented.
“The entire framework is being deepened to include other indices that will effectively permit reduction in the cost of doing business in the country and improve the ranking of Nigeria on the World Bank Ease of Doing Business”, he said.
According to him, the association will continue to encourage investors to take advantage of these initiatives while imploring government to extend the improvements to other areas that affect the Ease of Doing Business not currently captures in PEBEC framework to improve Nigeria’s competitiveness.
He further advised that to enable the private sector benefit more from EODB, government needs to expand the scope of the EODB programme by considering the implementation of its recommendations in view of the peculiarity of the Nigerian economy.
Other recommendations by the association include, deepening existing reforms by including indices that will effectively enforce the reduction in the cost of doing business; Expanding the set objectives under “getting electricity” to include those that will address the challenges of electricity inadequacy, improper pricing and metering. It also implored government institutions like NBET, TCN, GENCOs and NERC to resolve the dispute between manufacturers and the Discos to avert the total collapse of the Nigeria Electricity Supply Industry and create a quarterly forum where private sector will receive feedback from relevant MDAs.
on the delivery of their mandates and general performance as well as examine the performance level of the special funding windows provided by government for businesses with a view to addressing the current poor access to credit and high cost of borrowing;
MAN also urged government to tackle the challenge of multiple taxes and levies across the three tiers of government and eliminate all forms of road blocks set up by its commissioned revenue collection agents of on the Nigerian highways in active connivance with security agencies; Its enjoined the Buhari administration to review the mandates and functions of its regulatory agencies to eliminate incidences of duplicity of function as these negatively impact the manufacturing sector. Furthermore the Cumbersome procedures and exorbitant administrative charges of government agencies were seen as a thorn in the flesh of manufacturers hence their call for positive trends of crafting appropriate policies that would enhance infrastructure upgrade and reduce the cost of doing business to the barest minimum.”