Tuesday
August, 16

Operators Bemoan Productive Sector Collapse

Operators have sounded the alarm about the impending collapse of the productive sector if the government does not give any type of intervention as the manufacturing sector suffers from the rising cost of diesel, insufficient electrical supply, and persisting foreign exchange problems.

In response to the recent increase in diesel prices, the Manufacturers Association of Nigeria (MAN) recalled that over the years, the manufacturing sector had faced numerous difficulties that had reduced the number of industries in Nigeria and turned many industrial hubs into warehouses for imported goods and venues for events.

The manufacturers saw that the manufacturing sector was experiencing unspeakable misery, which resulted in the closure of numerous industries, a decrease in capacity utilization, a further loss in GDP, widespread unemployment throughout 76 sub-sectors, and an increase in crime rates.

The association cited high operating costs caused primarily by insufficient electricity supply and the high cost of alternative sources, excessive regulation and taxation, and a lack of foreign exchange for importing locally available machinery, spare parts, and raw materials as the sector’s main challenges.

READ MORE: NNPC Blocks Exxon Mobil’s Asset Sale To Seplat

They pointed out that all of these factors combined to produce the sector’s underwhelming performance. Segun Ajayi-Kadiri, Director-General of MAN, commented on the rising price of diesel and called for the immediate removal of Value Added Tax (VAT) on Automotive Gas Oil, also known as diesel, as an immediate stimulus for price reduction and to speed up action in reactivating or privatizing the petroleum products refineries in the nation.

Manufacturers demanded the creation of a national response and sustainability strategy to address the problems caused by Russia’s ongoing invasion of Ukraine as well as consistent support for manufacturing to hasten the process of recovery from COVID-19 and previous recessions and prevent the total shutdown of factories across the country, which would have a multiplier effect on employment.

Other demands include the granting of licenses to manufacturing companies and aviation industry operators to import diesel and aviation fuel directly to prevent the avoidable monumental paralysis of manufacturing operations caused by the complete shutdown of production operations and movement of people for business activities, as well as addressing the issue of the national grid’s repeated failure (twice in a week), which is causing a severe electricity shortage in the country.

To mitigate the impact of the supply gap-driven high cost of AGO, restrictions on the export of maize, cassava, wheat, food-related products, and other manufacturing inputs available in the nation; and granting preferential forex allocation at the official rate, they demanded policy to urgently allow manufacturers and independent petroleum products marketing companies to also import AGO from the Republic of Niger and Chad.

According to Ajayi-Kadiri, the present rise in the price of crude oil and other refined petroleum products like diesel is one of these disruptions brought on by outside shocks that demonstrates how interconnected all the world’s economies are.

Without a doubt, he asserted, the current shortage and over 200 percent price hike of AGO are consequences of Russia’s ongoing war with Ukraine.

Due to the isolation of Russia’s oil export, the US and EU imposed several economic sanctions on Russia that drove up the price of crude oil to $120 per barrel (which has since reduced to roughly $100).

He added, “More worrying is the dead silence from the public sector as regards the predicament of businesses. The group is deeply concerned about the effects of the over 200 percent increase in the price of AGO on the Nigerian economy and the industrial sector.

What can we as a nation do to enhance our economic shock absorbers from outside shocks is one of four apparent issues that immediately come to mind and are severely demanding answers. Should manufacturing businesses who are already suffering from several levies, limited access to foreign cash, and a recent increase in diesel prices of more than 200 percent be encouraged to cease operations? Should we give up and let the economy once more descend into a recessionary valley? Is the country prepared to handle the skyrocketing inflation and unemployment rates that will result?

He claims that the short-term disruption brought on by Russia’s invasion of Ukraine will continue to severely disrupt the global energy market and impair the supply of petroleum products, leading to a continuous rise in the price of refined petroleum products, including AGO.

JOIN OUR NEWSLETTER

- Advertisement -

Our newsletter gives you access to a curated selection of the most important stories daily.

- Advertisement -

Must Read

Uchara Faith
Faith is a valiant writer who has an undisputed passion for writing. She has worked with many highly reputable companies as content creator, radio presenter. She has a book to her name titled ECHO OF A DISTRESSED HEART. She's goal driven oriented person.

Operators have sounded the alarm about the impending collapse of the productive sector if the government does not give any type of intervention as the manufacturing sector suffers from the rising cost of diesel, insufficient electrical supply, and persisting foreign exchange problems.

In response to the recent increase in diesel prices, the Manufacturers Association of Nigeria (MAN) recalled that over the years, the manufacturing sector had faced numerous difficulties that had reduced the number of industries in Nigeria and turned many industrial hubs into warehouses for imported goods and venues for events.

The manufacturers saw that the manufacturing sector was experiencing unspeakable misery, which resulted in the closure of numerous industries, a decrease in capacity utilization, a further loss in GDP, widespread unemployment throughout 76 sub-sectors, and an increase in crime rates.

The association cited high operating costs caused primarily by insufficient electricity supply and the high cost of alternative sources, excessive regulation and taxation, and a lack of foreign exchange for importing locally available machinery, spare parts, and raw materials as the sector’s main challenges.

READ MORE: NNPC Blocks Exxon Mobil’s Asset Sale To Seplat

They pointed out that all of these factors combined to produce the sector’s underwhelming performance. Segun Ajayi-Kadiri, Director-General of MAN, commented on the rising price of diesel and called for the immediate removal of Value Added Tax (VAT) on Automotive Gas Oil, also known as diesel, as an immediate stimulus for price reduction and to speed up action in reactivating or privatizing the petroleum products refineries in the nation.

Manufacturers demanded the creation of a national response and sustainability strategy to address the problems caused by Russia’s ongoing invasion of Ukraine as well as consistent support for manufacturing to hasten the process of recovery from COVID-19 and previous recessions and prevent the total shutdown of factories across the country, which would have a multiplier effect on employment.

Other demands include the granting of licenses to manufacturing companies and aviation industry operators to import diesel and aviation fuel directly to prevent the avoidable monumental paralysis of manufacturing operations caused by the complete shutdown of production operations and movement of people for business activities, as well as addressing the issue of the national grid’s repeated failure (twice in a week), which is causing a severe electricity shortage in the country.

To mitigate the impact of the supply gap-driven high cost of AGO, restrictions on the export of maize, cassava, wheat, food-related products, and other manufacturing inputs available in the nation; and granting preferential forex allocation at the official rate, they demanded policy to urgently allow manufacturers and independent petroleum products marketing companies to also import AGO from the Republic of Niger and Chad.

According to Ajayi-Kadiri, the present rise in the price of crude oil and other refined petroleum products like diesel is one of these disruptions brought on by outside shocks that demonstrates how interconnected all the world’s economies are.

Without a doubt, he asserted, the current shortage and over 200 percent price hike of AGO are consequences of Russia’s ongoing war with Ukraine.

Due to the isolation of Russia’s oil export, the US and EU imposed several economic sanctions on Russia that drove up the price of crude oil to $120 per barrel (which has since reduced to roughly $100).

He added, “More worrying is the dead silence from the public sector as regards the predicament of businesses. The group is deeply concerned about the effects of the over 200 percent increase in the price of AGO on the Nigerian economy and the industrial sector.

What can we as a nation do to enhance our economic shock absorbers from outside shocks is one of four apparent issues that immediately come to mind and are severely demanding answers. Should manufacturing businesses who are already suffering from several levies, limited access to foreign cash, and a recent increase in diesel prices of more than 200 percent be encouraged to cease operations? Should we give up and let the economy once more descend into a recessionary valley? Is the country prepared to handle the skyrocketing inflation and unemployment rates that will result?

He claims that the short-term disruption brought on by Russia’s invasion of Ukraine will continue to severely disrupt the global energy market and impair the supply of petroleum products, leading to a continuous rise in the price of refined petroleum products, including AGO.

JOIN OUR NEWSLETTER

Our newsletter gives you access to a curated selection of the most important stories daily.

Specially For You

- Advertisement -

Recommended

- Advertisement -
- Advertisement -