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Buhari Receives Manufacturers, Promises Access to Forex

Nigeria’s President Muhammadu Buhari has assured manufacturers in the country that the federal government would take appropriate measures to improve access to foreign exchange (forex) for importation of raw materials

Nigeria’s President Muhammadu Buhari has assured manufacturers in the country that the federal government would take appropriate measures to improve access to foreign exchange (forex) for importation of raw materials and machines that are not readily available locally. Buhari gave the assurance on Wednesday, in response to a request by the leadership of the Manufacturers Association of Nigeria (MAN).

MAN had, during an advocacy visit to State House, Abuja, appealed to the government to take steps to ensure that the real sector contributed more to the Nigerian economy.

In a similar vein, the Nigerian Association Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA), and some experts blamed the rising volume of Nigeria’s trade deficit on the inability of the government to enforce its policy on consumption of locally manufactured goods.

Buhari told the MAN executive that the relevant ministry would revisit their concerns about the increase in excise duties on some identified products and other tariff-related matters.

On the African Continental Free Trade Area (AfCFTA), the president said Nigeria would fast-track the process of setting up the Designated Competent Authority that would superintend the administration of Rules of Origin and Commission as well as the automation of issuance of electronic Certificate of Origin.

He said the federal government would also ensure that relevant platforms were established for monitoring and evaluation of the performance of the Ease of Doing Business and improve government patronage of made in Nigeria products.

Buhari told the MAN delegation, “Our strategic plan to boost manufacturing activities in the country is on course. We will continue to improve the patronage of locally made goods, bridge the gap between skills required by industry and those provided by our tertiary institutions, and ensure seamless access to long term finance for our Small and Medium-Scale Enterprises (SMEs).

“We recognise that MAN remains a key stakeholder in this journey and we will continue our engagement with you.”

Stressing his belief in a private sector-led economy as an elixir for job creation, Buhari urged the leadership of MAN to continue to encourage manufacturers in the country. He said the government recognised the resilience of their members and other private sector organisations in promoting a virile manufacturing sector in Nigeria.

“I beseech you to continue to support the government in our quest to provide the appropriate environment that will attract the necessary investment, both domestic and foreign, for the upliftment of the nation’s economy,” he added.

The president noted that while the COVID-19 pandemic had an adverse effect on the economy, with the attendant fluctuations in the prices of oil, his administration successfully contained the spread of the virus and other diseases.

According to him, the federal government would continue to consistently deploy prudent means of judiciously utilising its limited revenue to sustain the economy and stimulate growth.

Buhari emphasised that in spite of limited resources, his government had made appreciable progress in road and rail infrastructure development; provision of stimulus packages for the manufacturing sector; improvement in energy management; and support for exporters with a view to improving the operating environment for businesses in Nigeria.

He said, “These projects are there for all to see. Furthermore, we are vigorously pursuing reforms on ease of doing business and currently putting in place other necessary policy measures and incentives that will guarantee full recovery from the consequences of COVID-19, sustain economic development and further shield the economy from the potential impact of fluctuations in the price of crude oil in the global market.

“I have listened carefully to all the challenges enumerated by the president of MAN and would like to assure you that, like we have done in the recent past, we will give consideration to some of the constraints that are yet to be fully addressed, especially those that align with our policies and programmes for economic recovery and sustainable development.

“Let me assure you that this administration is fully aware that the survival of Nigeria lies in agriculture and having a viable domestic manufacturing sector. I must emphasise here that when I say agriculture, I also refer to agro-allied business, which is the value-added component in the value chain.”

According to the president, a strong manufacturing sector creates more jobs and wealth for the citizens.

“It will usher in sustainable economic prosperity because we will produce what we consume as a nation and generate foreign exchange by exporting surpluses and by import substitution,” he said.

Earlier in her remarks, Minister of State for Industry, Trade and Investment, Mariam Katagum, stressed that the ministry would continue to work with MAN in the areas of policy, trade and creation of an environment that would facilitate the growth of businesses in Nigeria.

“MAN is in business to create a climate of opinion in this country so that manufacturers can operate efficiently and profitably for the benefit of all,” she said.

MAN president, Mansur Ahmed, said the advocacy visit was basically to thank the president for all the support extended to the manufacturing sector since his assumption of office in 2015, and seek further support for the sector to overcome constraints to competitive manufacturing in the country.

Ahmed articulated remedies to the challenges of the sector, and spoke on the Blueprint for Accelerated Development of Manufacturing in Nigeria, which will be formally presented to Buhari in the first quarter of 2022.

The MAN leadership identified some challenges that could be addressed in the immediate term to improve the manufacturing environment. They include, according to him, inadequate supply of foreign exchange, inadequate electricity supply, poor access to long-term fund, poor patronage of Made-in-Nigeria goods and local content development, and looming increases in tax rates.

NACCIMA, Analysts List Measures to Reverse Nigeria’s Trade Deficit

Meanwhile, NACCIMA and some experts attributed the country’s rising trade deficit to the inability of the government to enforce its policy on the consumption of locally manufactured goods. They also blamed the trade deficit on Nigeria’s over reliance on imported refined petroleum products and the weak non-oil sector.

The National Bureau of Statistics (NBS) estimated that Nigeria recorded N3.03 trillion trade deficit in the third quarter of 2021. Nigeria’s total foreign trade grew to N13.3 trillion in the third quarter of 2021, and was made up of N8.2 trillion imports and N5.1 trillion exports.

Reacting to the negative trade balance, Director General of NACCIMA, Mr. Ayo Olukanni, said in an interview with THISDAY that the association had used every opportunity since the beginning of the year to raise the alarm about the country’s growing trade deficit. Olukanni pointed out that the trend was also responsible for the perennial weakness of the naira against the dollar and some other international currencies.

Olukanni said, “We observed the growing gap between import and export, which was also reflected in the pressure on the naira and loss of its value in the forex market. It is, therefore, not surprising that we are ending up with these figures as trade deficit in the third quarter of year 2021.

“It’s a reflection of the fact that we have not rigorously implemented our policies to truly consume what we produce and produce what we consume. Must we always import champagne and wines of all make from all corners of the world to celebrate Christmas and the New Year? We have the capacity to produce most of what we import. We should, therefore, put a stop to importation of such categories of goods, such as textile, canned food, and drinks.

“As we look forward to year 2022, we must rigorously pursue our policies, especially as envisioned in the national budget for 2022, to reduce importation and improve on our nonoil export.”

He emphasised the need to address the well-known infrastructure challenges in the country, saying, “We must empower our local industries to significantly improve their productive capacity to meet local needs. In this respect, our new national policies on Small and Medium Enterprises (SMEs), which include micro enterprises, deserve attention and more support as Year 2022 rolls in.

“The objective should be to reduce importation of goods as we concertedly work to reduce and even end our trade deficit. Year 2022 is an opportunity for us to truly walk the talk as a less import dependent country.”

Speaking in the same vein, an economist and Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, stated that current trade balance deficit of N3 trillion, as reported by the NBS for the third quarter of this year, represented an increase of 26.5 per cent on year-on-year comparative analysis.

Yusuf noted that the huge import bill on refined petroleum products and the weak competitiveness of the country’s non-oil economy were major contributory factors to the unfavourable balance of trade position.

He said the balance of trade position of the country could be addressed by giving exporters unfettered and unconditional access to their foreign exchange proceeds.

Yusuf said, “We need to create a fast track for exporters at the ports. If we can have fast track for imports, it is even more imperative that we have a fast track for export. Meanwhile, export processes remain very frustrating at our ports. The shipping companies and the terminal operators do not accord the desired priority to export. This should change.

“Terminal operators and shipping companies should be compelled to prioritise export. For most of them, export is not in serious reckoning in their operations.”

Yusuf, who is the immediate past Director General of the Lagos Chamber of Commerce and Industry, also stated that government should provide access to intermediate inputs on concessionary terms to exporters in order to make their exports competitive both in quality and price.

Similarly, Chief Executive Officer of De-SME Facilitators Limited, Mr. Tony Chinwe, identified the sharp drop in the non-oil export and a huge increase in the aggregate import value as major causes of Nigeria’s trade deficit.

Chinwe said the drop in the value of non-oil exports “can be traced to a rapid drop in the value and volume of agricultural and agro-processed export products due to insecurity challenges that disrupted farming activities and increased economics of production for farmers.”

He added, “Also, the twin effects of COVID-19 and insecurity have seen the nation spending huge sums on the importation of medical consumables, vaccines, food items, sanitary/hygiene products and military equipment to combat both menace. These have significantly increased the aggregate import bill of the nation.”

He recommended that the government should diversify the export base of the economy by creating an enabling environment for the private sector to drive the process.

Chinwe stated, “Some of the sectors that should be given boost in this regard are petroleum and petro-chemical industry products, food products, auto and auto-parts, cotton-textile-garment products, foot wears and packaging materials.

“We, as a nation, have the comparative advantage in these areas. If government provides the enabling environment, we can be a net exporter of these products.

“We should domesticate and develop petroleum value chain to save the foreign exchange spent in importing them and even export the excess to generate foreign exchange revenue; ditto for the food and agriculture value chain.”

Chinwe stated that the interventions required from government to reverse in the country’s trade deficit included the “creation of viable industrial parks and clusters with captive power, security and other shared services where business entities that are involved in manufacturing and agro-processing can take up work spaces.”

He said, “the Bank of Agriculture (BOA) should be restructured, recapitalised and re-engineered to prepare it for a major role in financing agribusinesses along agriculture value chain,” while the “bottleneck that stifle export processing in Nigeria should be removed.”

Deji Elumoye in Abuja and Dike Onwuamaeze in Lagos

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