Mixed grill for manufacturing sector – The Nation

From all indications, the manufacturing sector has improved in the last three months due to a number of reforms initiated by the Federal Government. However, operators have said the unfavourable environment is still a threat to doing business. TOBA AGBOOLA reports.

The manufacturing sector has picked slightly in the first quarter of 2012.

The Manufacturers Association of Nigeria (MAN) has said although the macroeconomic indicators in 2012 showed that the country’s Gross Domestic Product (GDP) grew as a result of improvement in the non-oil sector, this may not last for long, unless the infrastructure base is put in order. They said multiple taxation and lack of good infrastructure, such as power  has remained a major challenge to business operation in the country.

The Chairman, MAN, Apapa Branch, John Aluya, said the recent survey by MAN and a US-based organisation, revealed that multiple  taxes and levies paid by companies are having untoward effects on businesses.

He said: “In most cases, the Organised Private Sector (OPS) becomes the target for myriad of taxes and levies that are inimical to its sur-vival. More worrisome are the activities of the local government revenue agents, who in spite of state governments approval of collectable taxes and levies, have continued to flout this directive and gone ahead to continue intimidating our members for payment of illegal levies and taxes.”

Chairman, Infrastructure Committee of MAN,  Reginlad Odiah, argued that capacity utilisation in the manufacturing sector has not witnessed significant growth because nothing has really changed over the years. 

He said capacity utilisation stood at 42.5 percent, a figure described by stakeholders as grossly abysmal to move the manufacturing sector forward.

Besides, he said the government has not really provided the enabling environment for manufacturers to produce and employ more as a result of the high level of insecurity in the country, which he stated, has  forced many operators to scale down their level of production. 

SMEs sector

 

The Small and Medium Enterprises (SMEs) sector’s contributions to Gross Domestic Product (GDP)  has continued to depreciate in the first quarter.

The President, National Association of Small and Medium Enterprises, Alhaji Garba Ibrahim, said multiple taxation is killing businesses in Nigeria.

“You don’t tax entrepreneurs to death. In fact, some countries that value the sector so much do not ask them for tax, not to talk of multiple taxation. The Federal Government’s tax policies need a serious review,” he said.

He said NASME is asking for a review of conditionalities for accessing credit facilities from development finance institutions to accommodate small business practitioners that find it  difficult to access funds from the institutions.

Ibrahim proposed that a percentage of the  intervention funds should be domiciled with regional development finance institutions, such as the New Nigeria Development Company (NNDC) and Odua Investment Company, as well as a development institution for the eastern part of the country for easy accessibility to MSMEs spread across the country.

He said for the SME sector to experience growth, government must adequately fund the sector. 

 

Non-oil sector

 

The most recent data available from the National Bureau of Statistics (NBS), indicated that the non-oil sector continues to grow in  investment. 

But the non-oil sector grew 9.07 per cent between the last and first quarter of this year, higher than the 8.93 per cent recorded in the same period in 2010.

According to the NBS, this growth was largely driven by improved activities in the telecommunications, building and construction, hotel and restaurant and business services.

The  non-oil export sector has deep agro-allied linkages made up of semi-processed and processed agricultural products, such as cocoa, cashew, sesame seed, ginger, gum Arabic, shrimps, cotton and rubber. The country is also a major exporter of finished leather which has direct linkage to the livestock growers. 

Expectedly, the export sector has helped in no small measure to boost the incomes of over 10 million farmers in rural areas across the country. 

 

CBN Intervention fund

 

As at the middle of the first quarter, about 99 per cent  of CBN’s N200 billion intervention funds for manufacturers had been disbursed.

Head, Risk Management Division, Bank of Industry(BoI),  Kola Adewole,  disclosed that over 99 per cent of the N200 billion intervention fund set aside for manufacturers  has been disbursed.

The CBN set aside the money in 2010 in order to  achieve quantitative easing as well as to provide liquidity and cheap financing to the manufacturing sector, especially at a time when bank credit was not forthcoming due to the restructuring exercise in the banking sector.

Adewole said the objectives of the fund include fast-tracking the development of the manufacturing sector by improving access to credit to manufacturers; improving the financial position of the Deposit Money Banks; increasing output; generating employment; diversifying the revenue base, as well as increasing foreign exchange earnings. It is also meant to provide inputs for the industrial sector on a sustainable basis.”

 

Export Expansion Grant 

 

In November last year, the House of Representatives Committee on Trade and Investment, directed the Nigerian Export Promotion Council (NEPC) to suspend all outstanding certificates for payment until investigation is concluded on the misuse of the Export Expansion Grant. 

Contrary to speculation that the grant was scrapped, NEPC said it was only suspended. A follow up letter from the House of Representatives Committee on Trade and Investment dated February 23, 2012 and signed by the Chairman of the Committee, Hon. Sylvester Ogbaga revealed that the committee has decided to lift the directive to suspend all outstanding certificates for payment while investigation still continues. 

The EEG was established through the export incentive and Miscellaneous provisions Act No. 18 of 1986, it is a post shipment incentive scheme that is designed to induce performance of non- oil exporters whose minimum annual export turnover is N5million. 

The Executive Director, Chief Executive Officer, David Adulugba said the scheme is aimed at assisting exporters to expand their volume and non-oil exports, diversify export markets and to make them more competitive in the international market. 

“To be eligible, an exporter must have exporter manufacture, semi- manufactured, semi-processed or primary products. Also the exporter proceeds must be repatriated into a domiciliary account in Nigeria and confirmed by the Central Bank of Nigeria (CBN).

“The introduction of the scheme has significantly increased the flow of foreign exchange into the economy as a result of improvement in the culture of formalised export by the Nigerian business community. The attraction of EEG is no doubt a motivating factor.

“Exporters now have more confidence in the system. Transparency has remained the watchword, then the time lag for processing of claims has narrowed down except in recent times when institutional interruptions has crept into the schemes operations. More so records are properly kept, they are up to date and electronically preserved,” he said.