By Merit Ibe
The Manufacturers Association of Nigeria (MAN) has expressed concern over the recent 200 percent increase in the price of Automative Gas Oil (AGO), calling on government to urgently remove VAT on AGO and expedite action in reactivating or privatising the petroleum products refineries in the country.
The Association also lamented the implications of the sharp increase in the price of diesel on the manufacturing sector, which has imposed more hardship on the manufacturing sector leading to the closure of many industries, reduction in capacity utilisation, further decline in GDP, large scale unemployment across 76 sub-sectors and increase in crime rate.
The Director General, Segun Ajayi-Kadir, who made the remarks, noted that the recent short supply and over 200 per cent increase in the price of AGO are part of the backlashes from the ongoing invasion of Ukraine by Russia, adding that the situation has further added to decrease in foreign exchange earnings from the manufacturing sector as high cost of production feeds into export commodity prices.
He said the increase has resulted in very “sharp reduction in Government tax revenue occasioned by drop in sales, lower profitability as lesser quantum of disposable income will be available to purchase manufactured goods; “Reverse-multiplier effect, as cost of production escalates and the headways already made in the sector are grossly eroded;
“Negative spiral effects on every sector of the economy, resulting in hyperinflation, lower productivity and turnover; “Depressing trickle-down effects on productivity, unemployment and standard of living of the citizenry;
Uncontrollable incidences of insecurity with dangerous implications for economic and social wellbeing of over 200 million Nigerians.”
The MAN boss who expressed worry over the deafening silence of the public sector as regards the plight of manufacturers, asked what can be done as a nation to strengthen the economic absorbers from external shocks. “Should manufacturing companies that are already battered with multiple taxes, poor access to foreign exchange and now over 200% increase in price of diesel be advised to shut down operations?