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Operating environment stifling productivity, say manufacturers

By Femi Adekoya
24 September 2021   |   1:20 am
A vast majority of Nigerian manufacturers have expressed concerns about the prevailing operating environment, noting that multiple taxation and over-regulation are hurting the productivity of their enterprises.

A vast majority of Nigerian manufacturers have expressed concerns about the prevailing operating environment, noting that multiple taxation and over-regulation are hurting the productivity of their enterprises.

According to the local producers, several regulations from federal, state, and local government agencies abound on a single production process.

They added that despite the Federal Government having in its possession, the Steve Orasanye Commission report on harmonisation and rationalisation of government agencies, the number of agencies supervising activities of the productive sector has increased.

In the Manufacturers Confidence Index (MCCI) for the second quarter of 2021 compiled by the Manufacturers Association of Nigeria (MAN), the CEOs said there was an urgent need to streamline taxes to reduce negative impacts of multiple taxation on companies’ margins.

The CEOs said that apart from the approved list of taxes and levies charged to companies by the Joint Tax Board (JTB), there were a large number of outside taxes, levies and fees imposed on manufacturers by revenue-generating agencies of the government.

To address these concerns, manufacturers said it was important for the government to publish the list of taxes and levies compiled by the tax board and ensure that all charges to the manufacturing sector were legal.

Eighty-one per cent, amounting to 324 CEOs enumerated, agreed that inefficiency at the national ports negatively affected productivity in the manufacturing sector.

MAN cited concerns such as currency volatility, unfavourable financing rates, disincentive government spending directed at manufacturers, port issues, and inefficiencies in the backward integration agenda.

Responses from manufacturers enumerated in the fieldwork of the report indicated persistent inefficient operations of the Nigerian national ports in terms of accessibility and timely clearance of cargoes.

Indeed, 81 per cent of manufacturers enumerated agreed that inefficiency at the national ports negatively affects productivity in the manufacturing sector. 10 per cent of respondents were not sure while only nine per cent simply disagreed.

“The challenges at the national port are hydra-headed: from the gridlock on the access road, delay in clearance of cargoes, high and undue demurrage, poor port equipment among others. Unfortunately, notwithstanding the various port reforms by the Government, much improvement has been achieved.

“To address this unfriendly situation, the Government needs to review the current status of the ports and address all port related challenges. More so, it is important to consider developing other ports outside Lagos State so as to decongest the Apapa and Tincan ports”, they noted.

MAN added “With the Monetary Policy Rate standing currently at 11.5 per cent, there may not be credible reason the average lending rate to manufacturers by the banks is still as high as 22 per cent as revealed by MAN survey of the sector.”

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