‘High cost of doing business impedes real sector’s performance’
According to the Manufacturers Association of Nigeria (MAN), the manufacturing sector under-performed in the 2017 financial year, as indicators continue to reflect the sector’s gradual drift back into economic recession.
The manufacturing sector fell into recession in the second quarter of 2015 with negative growth rates of -3.26% in first quarter and -3.36% in the second quarter of 2015.
However, the sector exited recession in the first quarter of 2017 with a positive growth of 1.36% but since then the performance of the sector has been lacklustre.
For instance, in the second quarter of 2017 the growth rate fell to 0.64% and -2.58% in the third quarter of the year an indication that the sector is drifting back into economic recession.
MAN noted that not much work has been done as regards improving the capacity of enablers needed in the sector, stating that the recapitalization of the Bank of Industry remains pending as well as the operationalisation of Development Bank of Nigeria.
The Association also identified the slow implementation of the improved Export Expansion Grant (EEG) scheme and expansion of existing, and development of new Export Processing and Special Economic Zones as intended by the Government in 2017.
Despite manufacturing sector’s PMI rising to 55.9 points last month, indicating an expansion in the sector, the NBS data showed that the real GDP growth in the sector in Q3 was -2.85 per cent.
To ensure that the poor performance of the real sector turns positive in 2018, MAN hinged government’s efforts on the potential impact of the 2018 budgetary provisions of the sector, noting that some of the provisions of the budget would be very important in supporting economic activities in the coming year.
According to MAN President, Dr. Frank Jacobs, the huge emphasis on infrastructure development, especially power and road infrastructure is an important trend.
On the specific and broad enablers, Jacobs emphasised the need for the nation to be extra cautious of its rising debt profile in view of the associated service charges and the future economic burden that this will exert on the nation.
With unemployment at its peak, he called for the downward review of the Company Income Tax from the current 30% to about 20% with targets for employment of Nigerians to technically reflect the prevailing operating environment and economic situation of the country.
MAN equally called for an accelerated action on the resource-based industrialization programme adopted by the Federal Government through deliberate funding and creation of enabling environment, as well as fast-track the development of key selected mineral resources through backward integration especially those with high inter-industry linkages.
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