Bimbola Oyesola
The Manufacturers Association of Nigeria (MAN) has ranked poor electricity and multiple taxation as top challenges the sector contended with in 2019.
The manufacturers’ Chief Executive Officers (CEOs) Confidence Index (MCCI) while analysing the third quarter of 2019, noted that based on the intensity, inadequate electricity supply and high cost of self-generated energy came first, while the duo of multiple taxation and overregulation was second.
Majority of MAN’s CEOs interviewed (89%) agreed that multiple taxes and levies depressed production in the manufacturing sector.
Record shows that manufacturers pay over 30 different taxes, levies and fees to agencies of the Federal, State and Local Governments on account of increased revenue target.
Consequently, the Association called the government to streamline the observed multiplicity of taxes and ensure that only approved taxes/levies/fees are charged. “Moreover, government should begin to consider reducing the various tax rates which has been the global order in recent times to encourage investment, particularly in the manufacturing sector,” it stated.
The CEOs equally identified and ranked a number of familiar challenges that still confronted their operations in the third quarter.
On forex, the Association said it investigations show that of all the MAN CEOs interviewed, 70 percent disagreed that the rate at which the sector sources foreign exchange (forex) has improved. While 15 percent agreed that the sector’s foreign exchange (forex) sourcing has improved, another 15 percent are not sure that forex has improved.
It stated further, “The response thus further confirmed that much has not changed in the supply of forex to the industry for purchase of machines, raw-materials and other manufacturing input that are currently not available in the country. At the moment most manufacturers source forex only at the parallel market at unfavorable exchange rate, making manufacturing import bills for raw-materials and machinery that not locally available unnecessarily high.
“This has been a major reason the sector has not competed favorubaly in the community market, particularly as it is awashed with cheap and sub-standard foreign substitutes.”
The Association noted that the afore-mentioned challenges completely resonate with the ranking obtained in the two previous editions of MCCI; thus, underscoring the need for Government to urgently address these challenges to enhance the competitiveness of the manufacturing sector and return the sector to the path of sustainable growth.