The Manufacturers Association of Nigeria (MAN) has alerted that consumers should be prepared to pay higher amount for goods as prices are set to rise. The President of MAN, Segun Ajayi Kabir, gave the hint on Thursday while explaining the downside risk of the new Central Bank of Nigeria policy of liberalizing the naira at a single window, the Investors’ and Exporters’ (I&E) window.…CONTINUE READING>>>...CONTINUE READING
Although expected, the CBN on Wednesday sent a circular that signals banks can buy FX from anywhere and at market price.
The new policy is at variance with the different windows held by the apex bank where they dictate the pricing of forex.
Ajayi said on Arise, “To us, it comes with a lot of certainties. I believe that it is going to create efficiency in the market and it is going to lead to capital inflow and give us a market penetration. It would improve our participation in the export market.
“As manufacturers, there is a downside. It is going to make our imports more expensive and so you will expect that the cost is going to be transferred to the final consumers. But on the balance, we see it as a positive development.
“What has happened tends to be in line with what we had anticipated that there will be some measure of unification and so this floating has tended to narrow if not remove the gap between the official rate and the parallel market rate which we have always complained has been inimical to productivity and particularly manufacturing.
“Our immediate reaction will be that it has its pros and cons but at least it has given us some measure of certainty and we are able to plan better and anticipate what we will require to import our raw materials, spares, and machines that are not locally available.
“But like I said, it comes with plus and minuses even when we had the official rate, most of our members were unable to procure forex and most of them were having to rely on the parallel market or some other means.”
Under the Godwin Emefiele-led forex regime, manufacturers had decried that they were unable to source dollars at the official rate which was pegged around N460/USD.
Asides from forex, manufacturers are grappling with rising taxes.
Former President Muhammadu Buhari introduced new Fiscal Policy Measures (FPM) for 2023 in a Circular dated 20 April 2023 signed by Zainab Ahmed, Minister of Finance, Budget and National Planning.
The MFP revised Excise Duty Rates and additional excise taxes ranging from 20 per cent to 100 per cent increase on previously approved rates for alcoholic beverages, tobacco, wines and spirits which took effect on 1 June 2023.
These are above the 2022 FPM’s approved Roadmap for 2022-2024 in the form of new and higher ad-valorem excise duties and specific rates while the excise duty rate on non-alcoholic beverages was retained at of N10 per litre.
He said the fiscal policy measure implemented at the last minute of Buhari’s government escalated the problems of the sector.
He accused the past administration of negligence of the plights of businesses, adding “A well-researched document was given to them on the impact of the policy on those industries.”
But the MAN president said, “The trust deficit that Nigerians have for the system is actually deep. In the manufacturing sector especially, there are perennial and lots of promises that have been made.
“For instance, the issue of infrastructure. The Electricity Act 2023, people believe that it holds a lot of promise and the fact that people can self-generate power.
“There are low-hanging fruits that the government can do to make fiscal and monetary policy. The multiplicity of taxes and levies. A joint tax force has a unified collection of taxes but some state governments have already taken that license to impose outrageous and sometimes irresponsible taxes imposed on the people. You can imagine asking a small-scale business in Kaduna to pay a haulage fee of N5m.
“I mean that is ridiculous because they are not even able to make that turnover in a quarter of the year. They are the issues that the Federal Government, state, and local governments have to work together on multiple taxes.…CONTINUE READING>>>
