The Manufacturers Association of Nigeria has said the rising inflation in the country is a threat to the recovery of the industrial sector.
The Director-General, MAN, Segun Ajayi-Kadir, said this in MAN’s position on the inflation rate of 16.47 per cent for January which was released by National Bureau of Statistics.
Ajayi-Kadir responded to an email enquiry by our correspondent on Tuesday night.
He said, “As you are aware, the manufacturing sector has been struggling, particularly in the past four quarters, the combined effect of COVID-19, deteriorating infrastructure, high regulatory compliance cost and tax obligations.
“So, rising and high inflation, perennially high interest rates and scarce/high rate of forex have compounded the downturn in the sector.
“In particular, the increase in the headline inflation from 15.75 per cent to 16.47 per cent is a threat to the envisaged recovery and the growth of the industrial sector.”
He observed that there was also the rise in food inflation which would compound the high cost of living and the disposable income of the average Nigerian.
The resulting weak consumer spending would worsen the high stock of unplanned inventory that the manufacturing sector was confronted with, he said.
He said, “You will recall that our economy slipped into its second recession in four years in the third quarter of 2020, after recording two contractions in a row.
“So the concerted efforts of government to recover the economy will have to address the aforementioned challenges.”
In doing this, he said, the private sector representative like MAN was duly armed with economic recovery recommendations that relevant government authorities could implement to speedily revive the economy from its current state.
The government, he said, should intensify efforts at stabilising the consumer price level through growth in agricultural output and diversification of the Nigerian economy in order to guarantee stable prices in both agricultural and manufactured goods.
Also, he added, there were quite a number of moribund industries in the country that should be resuscitated to boost output and thereby reduce prices.
He said government should also partner with MAN to accelerate the success in the resource based industrialisation initiative of the association.
The MAN boss said, “It is evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates.
“Therefore, for this moment and in the immediate future, government should assist manufacturing productivity with credit at competitive price.
“This could be in the form of concessions and enhancing existing special credit windows or creating additional ones for this important sector of Nigerian economy.”
He emphasised the need for deliberate policy to stimulate domestic production and thereby increase domestic as well as foreign demands for goods which would, in the long run, lower inflation and enhance exchange rate appreciations.