Local manufacturers in the country have urged the Federal Government to develop sustainable national anticipatory policy measures against external influences, in order to mitigate the impact of global activities on the economy.
According to the Manufacturers Association of Nigeria (MAN), the prevailing local challenges were compounded by the lingering backlashes of COVID-19 pandemic and the ongoing Russian-Ukrainian war.
They noted that apart from the need for ardent management of global peace, the series of global occurrences and the lessons learnt demand that national governments should begin to take drastic measures to manage these phenomena proactively going forward.
The local operators in the latest Manufacturers CEO’s Confidence Index (MCCI) for the second quarter of 2022, noted that though the operating environment in the quarter under review was fairly better than the condition in the preceding quarter due to compelling adjustments made by the government, manufacturers and households in response to general increase in price, forex shortage, increasing cost of energy, scarcity of raw materials and many more, thrown up by the war in Europe.
With an aggregate MCCI score that increased to 54.6 points during the quarter from 53.9 points of the first quarter of the year, MAN stated that the improvement in index score was attributed to the feedback on the anticipated improvement in business condition, employment condition and production level in the third quarter of the year.
Findings from the sectoral analysis showed that the Index score of Wood and Wood Products sector is 49 points in the second quarter of the year, which is a marginal uptick from 48.9 points obtained in the first half of the year, even though it is below the 50 baseline points.
The index score of Electrical and Electronics group improved to 50 points from 49.9 points obtained in the preceding quarter. The index of the Motor Vehicle & Miscellaneous Assembly moved above the baseline to 50.1points from 49.2 points of the preceding quarter.
MAN had earlier warned that said loose policy and obvious lack of commitment to implement key policy initiatives in the sector has triggered multiple backlash in the economy.
The association’s Director General, (DG), Segun Ajayi-Kadiri, while speaking on the rising inflation in the country, said the nationwide fuel scarcity witnessed in June was largely responsible for the rise in inflation.
According to him, the fuel scarcity necessitated further hike in energy prices, particularly prices of diesel, aviation fuel and petrol, which all had trickled down effects on the cost of food, manufactured products, other commodities, transportation and accommodation nationwide.
Most notably, the price of diesel has spiked by about 230 percent in the last one year, he said.
According to the National Bureau of Statistics (NBS), headline inflation for June 2022 stood at 18.6 per cent indicating a further rise of 0.85 per cent point from 17.75 recorded in the corresponding period of 2021.
According to MAN, the report revealed that the 18.6 per cent rate portends a gradual journey towards the 18.72 per cent peak inflation rate recorded in January 2017, which it says is a worrisome acceleration of inflation rate that should be halted, especially giving the fact that socio-political and economic activities that trigger spike in inflation are imminent.
The DG, stressed the need to strategically position the oil and gas industry to benefit maximally from future interruptions in global supply that triggers increase in price of crude oil, adding that, “It is appalling that an oil-producing country like Nigeria is at a disadvantage at a time when global oil prices are rising.”
He called on the government to accelerate the process of ensuring sustainable local refining of petroleum products by reactivating those currently quiescent, support the coming on stream of Dangote refinery and issue licenses for new refineries.
This will clearly reduce the pressure of the foreign reserve and mitigate the vulnerability of the economy to the external supply shock that has resulted in the energy crisis.
The MAN said that it is important for the government to strive to always meet the oil production quota set by OPEC, increase oil revenue and reduce budget deficit that has worsened inflation.