As grim as the report by the Manufacturers Association of Nigeria (MAN) on the state of the real sector is, it did not come as a surprise. The red light had been there for a long time. While the shut down of many manufacturing companies had been going on in the absence of a discernible strategy to prop up the fortunes of the real sector, all systems came off after the May 29, 2023, unilateral proclamation of President Bola Tinubu that upturned all projections and plans of the business community.
In its recent report, the MAN revealed that over 767 manufacturers had shut down operations and 335 became distressed in 2023 alone. In addition, unsold inventories amounted to N350 billion during the same period.
It’s not rocket science to understand why manufacturers that have been operating under 35 percent capacity still have their warehouses filled up. Despite having a huge population which the government touts in the refrain that Nigeria is a huge market for investors, the over 200 million population is impoverished with very low purchasing power.
What the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, called “disturbing tendencies of overbearing regulatory dispositions, disproportionate sanctions, obstructionist actions, outrageous fines and penalties, intimidation and high-handedness” encapsulate the tough operational environment manufacturers have had to contend with since the removal of petrol subsidy.
In the midst of crippling energy scarcity, the controversial Band A imposed on manufacturers has seen electricity tariff despite being grossly inadequate rise by 250 percent. This has seen energy cost rise to between 40 and 50 percent of the cost of production. This is the only country where such a single item takes up half of the cost of production.
Against the backdrop of the sustained complaint of manufacturers who are even threatening to get their members shut down operations, there has been no response from the federal government. Rather, the slew of tax increases continue with the latest being the proposal to increase Value Added Tax (VAT) to 10 percent from the prevailing 7.5 percent. If the debilitating factors against manufacturers continue unheeded, what are the parameters for the Federal Government’s claim that its ‘reforms’ are already yielding fruits and turning the economy around?
Last week, The Guardian newspaper carried a front page report where the desperate state of Nigerians was showcased. Reflecting the pervading sentiments of the people, it warned that as abhorrent as the thought is, more people are harbouring the wish that the military would intervene. Just two years ago, even the man would not have entertained such a thought. Despite the scathing and disingenuous response from the presidency’s Bayo Onanuga, the situation is dire for Nigerians.
High exchange rate, high and multiple taxes, an impoverished population as poor infrastructure and logistic challenges make up the perfect storm for things to go wrong.
The tax hawks having a say and a way in Tinubu’s economic team should be made to take a back stage. Development economists should step up to the dire situation on hand.
Tinnubu should not allow himself to be lulled into lethargy and a false sense that things are turning around. It’s getting worse, Mr. President.
Postscript
The Pointer @30
From the days of The Nigerian Observer under the old Midwest State, state newspapers held their own against the private media. From its humble beginning when Delta State was created, The Pointer has picked up the gauntlet and evolved into a newspaper to be reckoned with.
Unlike its peers in other states, it has remained visible on the newsstands every day.
Thanks to the untiring efforts of previous general managers as Bosa Iwobi, a man that brought his invaluable private sector background in the newspaper business and Monday Uwagwu, the present team led by Godfrey Ubaka is keeping the flame aglow.
However, as Governor Sheriff Oborevwori pointed out, there is still a lot of ground to cover, especially in boosting the visibility of the paper through the new media and online.
Notwithstanding, there is every reason for Ubaka and his team to roll out the drums. Happy anniversary, The Pointer.
