JACOBS: Investors Are Still Cautious And Waiting For Policy Directive
Frank Udemba Jacobs is the President, Manufacturers Association of Nigeria (MAN). In this interview with DAVID OGAH, he takes a look at manufacturing under president Muhamadu Buhari’s first 100 days.
President Muhammadu Buhari will soon be 100 days old in office. Can we have manufacturers’ evaluation of his administration so far?
THE Manufacturers Association of Nigeria (MAN) believes the present administration under the leadership of the President Muhammadu Buhari, has been moving in the right direction and needs time to complete the ongoing efforts at resolving some of the challenges facing the country.
Also, we are of the view that 100 days may not be enough to begin to judge this administration; considering the fact that it is another political party that has taken over the government at the center, which on its own, will have to integrate its agenda with the existing machinery of governance.
Therefore, MAN will want to give the government some more time, while tracking the progress in line with programme of government in the economy.
The government is yet to unveil its policy direction. How has this affected the real sector and the economy at large? There are high expectations.
However, many investors are also cautious and are watching the direction of government. Manufacturers are still producing and are desirous of what government intends to do as regards addressing the major issues such as; energy, funding and multiple regulations, all of which add to cost of production and are making Nigeria products un-competitive.
How has the Government’s monetary policy through the CBN, especially the one that has to do with domiciliary accounts, affected manufacturers? In the first place, we appreciate the intention of the CBN to raise local productivity through the use of monetary policy.
However, we think the apex bank needs to also take suggestions from the stakeholders. The issue of domiciliary account should not be a blanket policy; as there are companies that may wish to access their essential raw materials, which currently are classified as not valid for forex. They may want to do so through recourse to their export proceeds that may have been lodged in the domiciliary accounts.
So they shold not be technically hindered. What of the discriminatory forex market entry that disqualified importation of 41 items from benefiting from the foreign exchange market, how has it affected manufacturers that depend on these items for raw materials? As I have said earlier, we are not totally against the CBN policy, what we are saying is that there is need to carry the stakeholders like us (MAN) along.
However, we are already dialoguing with CBN with a view to resolving the issue around the 41 items and we believe that at the end of the talks, the whole issue would be resolved and manufacturers would be able to import essential raw materials.
What is it that we expected the government to have done to the real sector which is yet to be done by now? Some of the issues we have presented in the past have centered around cost of doing business, which are high and inefficient energy distribution, high cost of funds, multiplicity of taxes and levies, over regulation from regulatory agencies and trade malpractices resulting in faking/counterfeiting and smuggling.
Some of these issues have been addressed partially, but we need a holistic approach that will resolve the problem and free manufacturing to a level that the sector would achieve its full potentials.
What are the expectations of Nigerian manufacturers from the Buhari’s administration? To fix all the issues as enumerated above. An efficient and regular power supply; a single digit interest rate, harmonization of taxes and levies, re-alignment and redirection of regulatory framework in terms of supervision and enforcement, strong policy and instrument to address trade malpractices through combination of fiscal and monetary policies and policy support that will elicit patronage of ‘Made-in –Nigeria’ products, all of which will go a long way in diversifying the economy.
What are those things that are needed to grow the real sector and the economy? If substantial part of the issues enumerated above are addressed, at least to about 75-80 percent and this is backed with policies and incentives that will encourage backward integration; which will ultimately take agriculture, solid minerals as well as downstream petroleum sectors along, then it is very much certain that the real sector will come alive and it will breathe life into the overall economy and move Nigeria to the comity of industrialized nations of the world.
Is it expedient to continue the oil subsidy regime in view of free fall of oil price at the international market? In the first place, Nigeria does not have business with the issue of subsidy regime.
But we are where we are today, due to the fact that we have mismanaged our oil sector, both in terms of upstream and downstream sectors. Therefore, the issue of subsidy does not arise.
Now that we are having challenges at the international market as regards the price of crude oil, it is expedient that we discontinue the oil subsidy regime and address the issues of our refineries and refine our crude oil locally.
After all, it has been proven that the whole arrangement is laden with corruption. Nigeria cannot afford to do the business as usual, we have to address this issue frontally and take a firm stand on it.