The Manufacturers Association of Nigeria (MAN) yesterday attributed the sector’s decline in its contribution to the Gross Domestic Product (GDP) in the 2024 third quarter to the “harsh effect of hostile economic policies” of the Federal Government.
The body noted that the policies have “largely constrained the country’s goal of rapid industrialisation and have left the economy struggling for survival.”
This was contained in a statement issued by MAN on Monday and signed by its Director General, Segun Ajayi-Kadir, conveying the association’s position on the GDP report for the third quarter of 2024 as released by the National Bureau of Statistics (NBS).
Daily Trust reports that Nigeria’s GDP grew by 3.46% year-on-year in real terms during the third quarter of 2024, according to the latest report from the NBS.
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The growth in Q3 2024 was primarily driven by the Services sector, which expanded by 5.19% and accounted for 53.58% of the aggregate GDP.
Reacting to the development on Monday, MAN pointed out that “In general, the report revealed that the growth of the Manufacturing Sector grew slowly year-on-year at 0.92 percent and decelerated quarter-on-quarter by 0.35 percent.
“Similarly, its contribution to GDP in the 2024 third quarter was 8.21%, lower than the 8.42% recorded in the third quarter of 2023 and lower than the 8.46% recorded in the second quarter of 2024.”
The body noted that drop underscores the “harsh effect of hostile economic policies which have largely constrained the country’s goal of rapid industrialisation and have left the economy struggling for survival.”
MAN added that, “Unfortunately, the Nigerian government has been characterized by its passive response towards the countless challenges battling the Manufacturing Sector.
According to MAN, the decline in the real growth of the Manufacturing Sector is a clear indication of the detrimental impact of the prevailing macroeconomic policies.
“This is further evidenced by the significant drop in nominal growth from 36.59 percent to 32.97 percent year-on-year, driven by high inflationary pressure and the exit of major multinational manufacturing companies.
“It is evident that inflation has been a significant factor in undermining the growth of the manufacturing sector, as the sector has been particularly vulnerable to the unstable macroeconomic environment, exacerbated by recent economic reforms,” the body said.
In its 14 – point recommendation, MAN asked the government to create special windows for providing single-digit interest rates to productive sectors and relax stringent conditions for SMEs to access funding and recapitalize the Bank of Industry (BOI) to meet the growing credit demand of industries.
The body also called for enhancement of credit information systems and broaden the scope of assets for collateral, implementation of the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee as well as reduction of the excessive increase in Environmental Impact Assessment (EIA) and Effluent Discharge (EMP) fees imposed by NESREA.
MAN recommended that government should retain the current excise duty of N10 per liter on non-alcoholic beverages to avoid shutting down the industry, direct the Central Bank of Nigeria to clear $2.4 billion outstanding dollar obligations on FX forward contracts to support manufacturers and review import duty rates for production inputs, particularly those not locally available, and consider pegging the rate at N800.
The body also recommended that the government should direct the Nigerian Electricity Regulatory Commission (NERC) to review the excessive increase in electricity tariffs for Band A customers and prioritize domestic gas supply to manufacturers and enforce Naira-denominated pricing.
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