” MAN agrees that oil subsidy is not good for the economy. We have seen the gains of deregulation in diesel. When diesel was deregulated, it becomes more easily available …”
By Industrial Digest
LAST WEEK Thursday, the Manufacturers
Association of Nigeria (MAN), wrapped up its 48th annual general meeting with an interactive session with industry editors across print, electronic and online.
At the event, Engr.Mansur Ahmed, the President of MAN, shares his thoughts on recent policies of the government, how they are affecting the manufacuring sector, and the wayforward. Excerpt:
What percentage of foreign exchange have manufacturers been able to access?
The Central Bank of Nigeria’s foreign exchange policy has significantly impacted on the manufacturing sector, but I can’t tell you the percentage of the total access to the forex.
This is because it changes forfrommpany to companies.
First, if a company applies for forex, CBN would ask what you are spending it on. CBN has identified a number of priority areas it willing to provide forex.
So, this policy meant that different companies would have different levels of access to the forex depending on what they need and what they are going to spend it on.
I can confirm to you that there is siga significant demand for forex by our memmembers’mpany but it’s not being met; and the percentage that is not being met is over 40percent.
This means that manufacturers can’t get the required amount of forex that they need to bring in raw materials not locally available, or equipment they need to keep their operations running.
What’s your take on the recent adjustments in petroleum price to over N160/liter, and the new electricity tariff?
We understand that the government said the amount of money is spent on fuel subsidy N10.413 trillion between 2006 and 2019, while subsidy on electricity has skyrocketed from N165 billion in 2015 to over ₦500 billion in 2019, are not sustainable.
So, the problem for manufacturers is not just an increase in the tariff, but the availability of electricity. We can afford to pay a high tariff if electricity is regular and sustainable.
MAN agrees that oil subsidy is not good for the economy. We have seen the gains of deregulation in diesel. When diesel was deregulated, it becomes more easily available; you don’t have to queue and sleep at filling stations, to get it.
So, this is what we believe will happen to petroleum products; let it be deregulated, and there will be consistent supply, and also we can encourage more people into the sector.
We know that the government cannot maintain its refineries, and has continued to depend on importing the products.
However, when deregulated, private investors will be encouraged to invest in the sector even in refinery and distribution so that ultimately the supply will be stabilized the price will come down.
We have seen that in all areas where deregulation has taken place.
Both the Nigeria Economic Summit Group, NESG, and Lagos Chamber of Commerce and Industry have told the government that the closed land border is not good for trade in the region. What’s MAN’s position on this?
We understand why the border closure took place. At one point, there was a massive influx of counterfeit products and arms into the country.
For instance, rice that has been in the warehouse for 10 to 15 years was smuggled into the markets in Nigeria, and that doesn’t make our local rice competitive.
Actually, border closure was parts of some recommendations that we made to the government, that one thing we must do to checkmate the influx of the dumping of substandard goods into our markets, is to close the border.
However we have recognized that the border closure will not be a sustainable solution, rather we should take the opportunity to improve our trade facilitation infrastructure for import and export. This would enable us to key into the African Continental Free Trade Area Agreement, AfCFTA.
So we have made a presentation to the government to reopen borders, not only because it is not good for sustainable trade within the region; if it remains closed we will not be able to participate in the Africa One Single Market in 2021.
Economic Community of West African States (ECOWAS) has postponed the launch of its planned single currency, Eco, following concern raised by President Muhammadu Buhari. What is your reaction to it?
The meeting of the ECOWAS Heads of States agreed that the single currency, called ECO, which was introduced by some of our French neighbors, cannot stand.
The intention was that if we are going to pursue a single currency for the region, it should be in agreement with all the stakeholders, and not by a few members. So, we cannot sustain the introduction until a proper agreement is reached by entire West Africa.