‘Logistics cost, gas pricing impacting local production’

Nigeria’s gas pricing policy and high logistics cost have continued to negatively impact on production costs in the nation’s manufacturing sector, the Lagos Chamber of Commerce and Industry (LCCI ) has said.

According to the chamber, the cost of logistics remains very high, arising largely from the poor state of the roads and the effects on transportation and logistics cost.

Besides, the LCCI added that charging users of gas in dollars creates pressures and volatilities of exchange rate depreciation.

The President, Chartered Institute of Logistics and Transport (CILT) Nigeria, Ibrahim Jibril, had earlier stated that a hassle free and seamless transportation system and movement of gods and services from one end of the country to another, through multimodal transportation, will bring about the development and economic restoration that Nigeria seeks, not neglecting the effect it will also have on the productivity of other sectors.

LCCI President, Babatunde Ruwase noted that while the effort of government in fixing roads is acknowledged, there is need for a better funding framework for Nigerian roads.

“The current budget-dependent framework for funding of the roads cannot make the desired impact. The proposal to set up a Road Fund needs to be quickly revisited and its implementation accelerated. This is the model that has worked in many other jurisdictions and we believe it will work here. The earlier we adopt this model for funding the roads, the better for the economy and the citizens”, he added.

On gas pricing, Ruwase explained that the pricing policy have been imposing a lot of burden on the manufacturing sector.

“It is inappropriate to charge in dollars for a product that is produced in Nigeria and sold in naira. Energy cost is a major component of cost and a major factor in the competitiveness of firms in Nigeria. We need to address the issue of gas pricing to support the non-oil sector of the economy and promote the realization of the objectives of Economic Recovery and Growth Plan [ERGP].

“The government needs to support investment in gas infrastructure in order to bring down the price of gas to end users. This will enhance the competitiveness of our industrial sector as well as other sectors of the economy”, he advocated.

He also called for improved regulatory framework in the economy, noting that the incidence of fake and substandard products as well as counterfeiting is on the increase.

“We acknowledge the efforts of the Standard Organization of Nigeria (SON) and National Agency for Food and Drug Administration and Control (NAFDAC), in ridding the economy of fake and substandard products. It is a major problem for many leading brands in the consumer and durable products sector. It erodes the market share of the leading brands, impacts adversely on their reputation, and erodes their profit margins. There are also implications for the health and safety of the citizens.”

“We, therefore, request for better investment in the capacity of the Standards Organization of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC). This is important to tackle the menacing and growing incidence of fake and substandard products”, he said.