By BLESSING OKEZIE, Lagos
Following the enormous challenges posed to the economy, the manufacturing sector in particular by the outbreak of the COVID-19 pandemic, the Manufacturers Association of Nigeria(MAN), has raised a 19 point agenda to government on how to salvage the sector from the brinks of total collapse.
The association, lamented that prior to the out break of the COVID-19, its members were besieged by a number of challenges leading to seemingly lackluster performance of the manufacturing sector and low contribution to the Gross Domestic Product (GDP) of the economy.
It listed these challenges to include poor economic infrastructure; difficult macroeconomic environment; over-regulation of the sector; multiple taxes and levies; cross-border trade challenges; trade malpractices; gridlock at the national ports, among others.
It said the cries and woes of the sector operators were about spurring government to action targeted at salvaging the sector from the bondage of the above challenges before the out break of the COVID-19 which plunged the sector into worse condition.
“The outbreak of COVID-19 pandemic is like applying salt on an ever-fresh wound, which unfortunately has now left manufacturing in a battered state, wailing and struggling for breath to stay afloat”, the association stated .
In the latest edition of the MAN CEOs Confidence Index (MCCI), a quarterly publication of the association used as an instrument for measuring changes in macroeconomic trends, operating environment and selected diffusion factors relevant to the manufacturing sector, MAN, canvassed that government should declare a state of emergency in the manufacturing sector of Nigeria in order to be acquainted with the status of the sector and craft strategies for quick recovery backed with sustainable stimulus packages.
It said government should establish a special bailout fund for the manufacturing sector with set deliverables on the number of jobs to be created, the volume of export, quantum of locally raw materials utilised and projected revenue.
Government should reduce the financial pressure on companies occasioned by COVID-19 by compensating manufacturing concerns that are forced to shut down with 60 percent of employees’ salaries for at least three months to prevent laying offs of employees and massive unemployment.
Government should support manufacturing concerns with existing loan facilities by reviewing the terms, especially reducing interest rates to 5 percent with two years moratorium.
It further said for manufacturers that are investing in order to scale up production, government should ensure they are granted loans at 5 percent interest rate for a period of 5 to 7 years. This measure according to MAN, will no doubt improve liquidity and ramp up productivity in the manufacturing sector in a manner that will cover up for obvious losses due to COVID-19.
Other recommendations made by the association to ensure that manufacturers keep head above waters in post COVID-19 era include government to Prevail on the Central Bank of Nigeria (CBN) to extend its COVID-19 Stimulus packages to manufacturers not covered by existing CBN initiatives. The CBN should also grant manufacturers increased access to foreign exchange at pre COVID-19 rate to support the importation of raw materials, machines and spares that are not available locally.
“Introduce fiscal measures by waiving of import duties on Active Pharmaceutical Ingredients (APIs), other raw materials required to manufacture essential products and food related items for one-year;
“Extend timelines for filing and paying taxes (including excise duty with a provision that it should be based on sales and not production) by six months after the economy returns to normalcy.
“Reverse the Value Added Tax Rate back to the pre 2020 Finance Act rate and reduce the Personal Income Tax to a flat rate of 10 percent for one-year effective April 2020. This it said would improve the disposable income of Nigerian workers, stimulate consumption, promote an upsurge in demand and increase production output.”
The association, also wants government to direct all regulatory agencies, especially Standards Organisations of Nigeria (SON), National Agency for Food and Drugs Administration & Control (NAFDAC) to reduce their respective administrative charges (Pre-COVID-19 rates) payable by manufacturing concerns by 50 percent.
It further recommended that government should direct the Nigeria Customs Service, the Nigerian Ports Authority and other related agencies of government to treat all requests from manufacturers expeditiously with great sense of responsibility and understanding of the prevailing situation, adding that as a matter of urgency, government should direct that cargoes containing manufacturing raw materials are cleared swiftly and ensure compliance with additional free days from the terminal and shipping lines to clear the containers to avoid demurrages as already announced, grant manufacturers waivers from all demurrages payable between February and July 2020, especially those occasioned by the lockdown directives of Government and others associated with COVID-19 pandemic.
MAN, further recommended that government should reconstitute the task force on port decongestion, issue relevant guidelines that would make the Nigeria Customs Service, Regulatory Agencies at the ports, shipping companies and terminals operators more responsible for service lapses; expeditious actions on building/expanding other ports outside Lagos.
MAN, also wants government to direct the Bank of Industry and NEXIM to grant manufacturers with existing loan facilities adequate Moratorium, reduce interest rate to 5 and review repayment period after the order of the approved stimulus packages of the CBN.
It said there should be Improve power supply to the manufacturing sector, maintain the prevailing electricity tariff and subsidize the price of natural gas that Shell Nigeria Gas and other gas franchisers are passing on to manufacturers with the effect of Naira devaluation which resulted to the prevailing 18 increase increase in the price of gas.
Listing other remedial measures to government, the association said “Prioritise forex allocation to the manufacturing sector for importation of machines and raw-materials that are not locally available.
“Harmonise taxes, levies and fees payable to the three tiers of government and its numerous MDAs.
“Fast track the provision of basic infrastructure, especially accessible road network and functional rail networks along the corridor of vital domestic trade hubs for raw materials, finished products and export routes.
“Intentionally invest in research and development, particularly to support the health and pharmaceutical sectors specifically for the development of essential products that can help in fighting COVID-19 including PPE, Masks, sanitizers, vaccine, medicaments, ventilators, test kits etc
“Sanction MDAs that are not complying with Executive Orders 003 and 005 to improve the government patronage of products manufactured in Nigeria.