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Poor Electricity, Multiple Taxation Top List Of Challenges Facing Manufacturers In Nigeria

Channels Television  
Updated December 16, 2019
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The manufacturer’s CEOs Confidence Index (MCCI) has identified inadequate electricity supply and the duo of multiple taxation and overregulation amongst others, as challenges confronting operations in the country.

The report which captures the third quarter of 2019 is created by the Manufacturers Association of Nigeria (MAN) to gauge the pulse of the economy on a quarterly basis.

It also listed other challenges to include High-interest rate, Poor accessibility to ports, Poor economic infrastructure and Difficulty in sourcing Forex.

On multiple taxations, the report showed that the majority of MAN CEOs interviewed (89 percent) agreed that multiple taxes and levies depress production in the manufacturing sector.

“Record shows that manufacturers pay over 30 different taxes, levies, and fees to Agencies of the Federal, State and Local Governments on account of increased revenue target.

“Consequently, there is the need to streamline the observed multiplicity of taxes and ensure that only approved taxes/levies/fees are charged.”

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It added that there had been an improved level of access to ports operation following the on-going Government reforms.

“Notwithstanding, poor access, heavy traffic and undue congestion at the ports are still prevalent. This assertion was corroborated by the responses of MAN CEOs interviewed in the current MCCI viz-a-viz previous responses in the first and second quarter of the year.”

Despite the Federal Government’s Executive order on the patronage of locally made goods, the report said that 62 percent disagreed that patronage of Nigerian manufactured products has improved as a result of the implementation of the Executive Order 003.

“This response clearly shows that the Executive Order 003 which mandated all Government establishments to make Nigerian manufactured goods first choice in public procurement processes has not been conscientiously implemented.”

It recommended that “there is a need to properly review the implementation processes of Executive Order 003 to ensure that Government patronage of goods manufactured in Nigeria improves to boost the performance of the Nigerian manufacturing companies for increased contribution to national output and increased employment opportunities.”

Meanwhile, the aggregate Manufacturers CEO’s Confidence Index for the third quarter of 2019 of 51.7 points, presented a marginal increase of 0.8 index point over 50.9 index points recorded in the second quarter of the year.

The report lauded the slight increase in the index, stressing that it depicts uptick in the performance of the manufacturing sector and shows that manufacturers’ confidence in the economy improved in the third quarter.

The manufacturer’s index recommended that an urgent resolution of the Nigeria-Benin border dispute should be done, so as to resuscitate Nigeria’s export trade within the ECOWAS region.

“Although the Third Quarter index point indicates marginal improvement in the economy over the preceding quarter, it is far below projections and expectations of MAN and the majority of the member-companies operating in the sector. Therefore, we urge the Government to urgently address the challenges identified and give priority attention to the general recommendations in this report.”

See the ranking of manufacturing sector challenges below:

Poor electricity and gas supplies/Non-reliability of gas supply/Scarcity of Diesel/High cost of LPG1st
Multiple taxation/levies/Frivolous Demand Notices by Government Agencies 

2nd

 

Over Regulation/Too many Government Agencies/Hostile regulatory regime
High-interest rate/Difficult condition in accessing loans in Nigeria/High cost of funds3rd

 

Poor accessibility to ports/Gridlock at the national ports/High Demurrages
Poor economic infrastructure/Bad roads/Poor rail transport systems4th
Difficulty in sourcing Forex/Multiple Forex widows/No Special treatment of manufacturers in sourcing Forex               5th
Low patronage/Poor patronage from the Government/Low turnover 

 

6th

Counterfeiting/influx of sub-standard products/Too many uncertified products in the market
High inflation/High cost of raw materials
High cost of spare parts/High cost of machines7th
High Government Bureaucracy / Closure of Borders 8th
Lack of skilled labour/Expensive skilled labour9th
Insecurity across the country   10th
High cost of Production   11th
Poor Environmental Management System                12th

 












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