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Government policies hinder economic diversification

By Femi Adekoya
03 August 2016   |   1:20 am
Worried by the downturn of events in the real sector, the Manufacturers Association of Nigeria (MAN) has stated that the Nigeria Industrial Revolution Plan (NIRP) remains a policy on paper without implementation.
President, Manufacturers Association of Nigeria, Frank Jacobs.

President, Manufacturers Association of Nigeria, Frank Jacobs.

Worried by the downturn of events in the real sector, the Manufacturers Association of Nigeria (MAN) has stated that the Nigeria Industrial Revolution Plan (NIRP) remains a policy on paper without implementation.

MAN President, Dr. Frank Jacobs while speaking at an interactive session with the Minister of Industry, Trade and Investment, Dr. Okechukwu Enelemah, explained that the policy believed to be a catalyst to drive the diversification agenda of the present administration has yet to see the light of the day.

He lamented that the present policies of government do not support the diversification of the nation’s economy.He said the plan of the federal government to increase Value Added Tax (VAT), the new high lending interest rate of 26 per cent minimum, scarcity of foreign exchange to procure raw materials and machinery spare parts by existing factories and new machinery for start-ups constitute disincentives to investment in Nigeria.

“When an economy is contracting as is the case in Nigeria today, countries work closely with the private sector by providing incentives and support to encourage them to maintain their investments and thus sustain employment level. Under such circumstances, taxes are reduced and impediments to growth are removed as Britain did recently following the Brexit.

“Similarly, the rumour that VAT would be increased must remain a rumour, else that would spell a disaster to what is left for businesses in Nigeria, because neither the ordinary consumer nor the companies whose margins have been stretched to the limit can afford such increase at this time.

“This interactive session is timely in view of the challenges the manufacturing sector has been encountering over the years, which have been exacerbated by recent monetary policy somersaults. I believe that it would provide a platform for us to assess the performance of the sector vis-a-vis the economy, with a view to articulating strategies for resolving them”, he added.

He said: “As manufacturers, the association has ‎taken a number of positive steps that are aimed at resolving some of the challenges, particularly those within the ambit of its resources and initiatives, especially on the use of local raw materials.”

The Minister, Industry, Trade and Investment, Dr. Okechukwu Enelemah, however said ‎the federal government through its development finance institutions would lend within the capacity of government to SMEs at single digit interest rate.

He said: “We are going to lend within the capacity of government and the government development finance institution at single digit interest rate. “From my understanding, the Central Bank of Nigeria (CBN) wants to bring down the inflation rate because it steals from pockets of the citizenry and there are many ameliorating steps being taken to make sure that funding made available for the most vulnerable in the society.

“As the economy takes off, we will be able to improve supply of funds to the real sector to help to tame inflation. We need to do more to improve production by making it easier for the producers to produce goods locally to act as downplay for inflation.‎”

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