Written by Ijeoma UKAZU

Power failure is killing production - MAN

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Dr. Frank Udemba Jacobs is the president, Manufacturers Association of Nigeria, MAN. In this interview with our correspondent, IJEOMA UKAZU in Lagos, he highlights the challenges faced by manufacturers in accessing the intervention fund provided by the Central Bank of Nigeria and also suggests ways the federal government can create an enabling environment for businesses. Excerpts:

 

How has the manufacturing sector fared with the poor state of power in the country?
Manufacturing cannot progress without power even 40 percent of the cost of production of manufacturing cannot exist without power. That means if we do not have quality and reliable power, we cannot operate successfully. The fact that the state of power in the country is deplorable is affecting our members adversely which prompted us to generate our own power. It is a major challenge and it increases our cost of production.

 

What has been the level of access to the N300billion Real Sector Support Facility, RSSF?

It is not only the real sector support intervention fund, there is also the Small and Medium Enterprise, SMEs fund which is N220 billion. These are good support programmes but the conditions attached are very stringent that only few companies are accessing them. CBN has realised that people are not accessing the funds as much as they should and recently undertook sensitization and talks with stakeholders to know why people are not accessing the funds with a view to modifying the conditions. We are still waiting for the result of that exercise but as at now, the conditions remain what they are.

 

The recent high exchange rate and difficulty in accessing Forex is said to have had negative impact on businesses in Nigeria. What has been the experience of local manufacturers since the crash of the naira?
It was initially difficult for manufacturers to access funds at the official rate but after our engagement with the CBN Governor, Godwin Emefiele and his officials, they realized the importance of manufacturers in nation building and in generating employment.
It is not 100 percent but we are satisfied that something is happening. There is improvement for manufacturers accessing funds and allocation of foreign exchange to manufacturers.
As for the exchange rate as far as we are concerned the prevalent exchange rate is the official rate since we are getting the money from the CBN. However, there are some members whose raw materials falls within the 41 items that are not valued for Forex, such people do not have a choice but to get such Forex through the 'black market' and of course we know the effect of that on cost of production and product. We believe that could lead to inflation. We are still engaging the CBN to remove those raw material items that are within the 41 items from the list so that our members can access Forex at official rate.
 
To what extent would you say the current administration is supporting local manufacturers?
The current administration have been rather slow in coming up with economic policies not just manufacturing companies. They have been slow in putting their team together. Presently we are saddled with the delay in the assent of the 2016 budget. If the national budget has been assented to, approved and begin implementation, there would have been improvement in the economy, and in particular the manufacturing sector. It is our hope that the government will live up to its responsibility. Recently we are aware that the government constituted what they call the Economic Management Team, which unfortunately excluded the private sector.
We do not think it is the right decision because the private sector has a major role to play in the creation of employment and alleviation of poverty in the country. If government works without their input, they are bound to make mistakes. The private sector is the stakeholders who feel the impact of the policies of government and therefore should be part of the team. Government should do something concerning the economic team, the way it is constituted, is one sided and not in the best interest of the economy.

 

In your opinion, what advise do you have for the Federal government that will lead Nigeria into an industrialised nation?
This can be taken from different perspectives. Over the years, we have been importing a lot of things into the country and most of the industries are based on importation of raw materials. There is need for a paradigm shift away from that concept to resource based industrialization where we concentrate in those areas where we have comparative advantage. Areas where we have natural resources that we should be able to process in order to generate the raw materials our industries need. Government should come up with a policy in collaboration with the private sector that would advance the nation and that way we can truly have a sustainable industrialization.
Another way is that, the current operators in the manufacturing sector, in the economy, in general are saddled with a number of challenges, starting with the cost of funds, where interest rate at an average is 23 percent. No manufacturing industry can survive at that level of interest rate. There is need for the government to do what is obtainable in other climes where interest rate for manufacturing, is from 3 to 5 percent.
The power situation you started with is very critical, there is need to ensure that there is adequate and sustainable power in the economy and to the manufacturing sector. Transportation is a major issue, in the sense that for one to transport goods from one state to another, cost a lot of money which is due to the deplorable condition of the roads. The railways need to come back on track to help reduce the big trucks that ply the high way and therefore help preserve our roads.
The issue of multiple taxation is biting hard on manufacturers in particular. A situation where we have to pay same tax at federal, state and local government level does not augur well for business. There should be a way to harmonise all the taxes that are paid in this country. There should be a one stop shop for taxation. These are some of the issues if government can adequately address.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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