By Merit Ibe
The Centre for Promotion of Private Enterprises (CPPE) has called for the suspension of planned imposition of excise duties on a range of manufactured goods in the country.
The Chief Executive Officer of the Centre, Dr Muda Yusuf, asserted that these were difficult times for manufacturers as they contend with escalating cost of production arising from elevated energy costs, rising operating expenses, sharp currency depreciation, forex market illiquidity, galloping inflation and numerous structural bottlenecks.
Earlier this year, Nigeria’s Finance Minister, Mrs Zainab Ahmed, hinted that excise duty would be imposed on a range of manufactured goods in the country anytime soon.
Yusuf complained that manufacturers were also experiencing significant spikes in the cost of raw materials, fund, high import duty, prohibitive cost of transportation and high cost of logistics, adding that a huge proportion of these costs cannot be passed on to the consumers because of weak purchasing power and high consumer resistance.
Given the strategic importance of manufacturing to the Nigerian economy, Yusuf advised that what the sector needed at this time was more stimulus and not more taxes, adding the high cost of diesel which has risen by close to 200 percent, high cost of gas and sharp increases in electricity tariffs were negatively affecting manufacturers.
“Several manufacturers are not able to import vital raw materials because of forex scarcity, a situation which is severely inhibiting their production and productivity. Many are forced to source forex from the parallel market at exorbitant rates. Manufacturers are yet to recover from the shocks of the pandemic and the subsequent recession…”
Manufacturing contribution to GDP is still less than 10 percent. The growth recorded in the sector in the fourth quarter of 2021 was a mere 2.28 percent, after a contraction of 2.75 percent in 2020.
“Manufacturers are struggling with unfair competition, especially from products imported from Asia which have flooded the Nigerian market, largely because of the porosity of the borders. These imports are often much cheaper than goods produced locally.
“The cost of logistics has continued to be on the upward trend, driven largely by the state of the roads, the limited freight capacity of the railway system, the crisis at the major ports, the traffic gridlock around the Lagos ports and extortions in the logistics chain.
He asserted that the manufacturing sector offers good prospects for job creation and lifting more Nigerians out of poverty in line with the government aspirations, noting that if the burden of tax becomes excessive and unbearable on this critical sector, the realisation of these outcomes by government would be difficult.”