The Manufacturers Association of Nigeria has hailed the 2023 proposed Budget as an encouraging sign that there are better days ahead.
Director General of the Association, Segun Ajayi-Kadiri, made this commendation while Speaking exclusively to TVC News Tolulope Ogunjobi, on Business Nigeria.
The DG who is also an Economist said the nation needs to recover productivity especially in the Petroleum Sector.
He added that he is encouraged that the President made allusion to the issue in his 2023 appropriation bill presented to the National Assembly.
On the issue of liquidity for the Manufacturing Sector, he said though he understands that the MPR had to go up due to prevailing circumstances but the decision presents a challenge to productivity and profitability for manufacturers.
He added that this is all the more challenging as it comes against the background of the fact that the year is coming to an end a normal period of boom for manufacturers in the country.
He said the decision presents the challenge of unsold inventory since prices will increase with increase in access to liquidity.
He however expressed confidence that it will still be a better period for manufacturers compared to the First 3 quarters of the year.
He described the first 3 quarters of the year as one filled with challenges for manufacturers in the country.
Read Excerpts of his interview below…
Yes, thank you very much. And it is a good thing that Mr. President mentioned a depletion of the manufacturing Sector, which is immediately because we actually now need to prioritize productivity so that we can begin to have hope that next year we present better performance for that sector and for the economy in general. I think that it can be to have 1.6 million barriers. But you know. Mr. President must. I believe have taken measures that will prevent the leakages that has prevented us from being able to produce that much and also setting the benchmark must be after observing the global trends and what we potentially might be able to deliver.
But to dwell more in terms of the volume that we are looking forward to. We actually need to put in the best that we can to be able to reach our production. They’re certainly not below it because we already catch trapped and then we must deliberately remove those measures that have limited our capacity to produce that much and sell in the international market. I think for a long time that we’ve not been able to meet our quota in OPEC and that has continued to limit our capacity to generate the right revenue that is needed to do so many things that government needs to do. So on the topic, I think, yes, even though we’ve not taken a better dive into the budget, but I think it pertains a good feeling.
Okay. Even though many people saw it, for me, the MPR, the Credit had to go up and in some other countries is heading out in terms of interest. But we must never forget that we need to be strategic about the way we manage our peers in spite of the situation and challenges for us, the manufacturing sector, no doubt it will change things, harder times ahead, because access to credit at competitive rate is the one that will require. We have always asked for single digits. So this unexpected increase from the way we look at it takes us further away from the single digit that we have always advocated for. So it put in high cost of credit for us, which is going to affect our cost of production, it’s going to affect the price at which we are going to sell the final product.
And in the face of dwindling disposable income of the average consumer, this pertains a high stock of unsold inventory that manufacturers have suffered. That means that we might look forward to low sales and be less competitive with products that are coming in from economies that have lower cost rates. It also means that we might not be able to make the kind of profit that we are looking forward to.
So throwing back more money to expand, employing more per government is not going to be possible. So I think there has to be a strategic means of guiding the productive sector against this reality that we have in our hands.
Yes, it’s true. I mean, there are externalities that are beyond the control, not to say of national economies, but what do you do in that regard? It means you need to look inward and prioritize your, for instance, attention. I think that we have always called for, and it’s not happened, that there has to be deliberate attempts by government to engage the private sector to deal with these externalities.
There has to be a deliberately packaged policy to insulate the priority sectors from these global shocks. For instance, this liquidity squeeze that we are having and the inadequacy of credit or high cost of it.
We need that to be able to create special windows to address this. Because the manufacturing sector, for instance, has the capacity to help replace the economy and to generate even the forex that is those cars that we have now, the internationally induced supply chain challenges and so on and so forth. There are things that you can prepare local remedies for and those are the points that we have been engaging government on. And we need more action in that regard. So that was we accept that there are some things that are beyond the government to deal with in terms of they are being imposed by the global environment.
We need to develop local solutions that will ensure that we minimize the impact and that we are able to grow the economy to guarantee our affiliates. Those are the points that we are missing.
Yes, towards the end of the year, that’s our boom period because people tend to buy more and of course manufacturers will always be optimistic. Many of our members are looking forward to it, albeit with more anxiety because it’s coming together at the time that we are witnessing possible increase in excesses, which means that our products are likely to become more expensive.
And so the rush to buy that you normally witness people may become more conservative in terms of how they spend their money. We also know that many civil servants have not been paid in many respects so we are not likely to see the kind of boom sales that we used to have before and that is not a comfortable proposition for the average Nigerian manufacturer. But on the whole, one can see from the figures that we are seeing and from the interaction with manufacturers that we are still looking forward to more sales than we’ve been having in the first three quarters of the year because it has been low, low sales all the way. So we are just looking forward to a little of a bump around this time. And since the budget didn’t tend to dampen the high spirits that we are looking forward to, I think it may encourage manufacturers to be more optimistic about what the future would ends and then it will not dampen the attempt to invest or the propensity to invest or to expand their current levels of production. The way it looks, inflation might still continue to increase and this is really worrying about the government. The last meeting mentioned that if it continues they might have no choice and to continue to also increase rates if that happens.
I’m looking at what might be the implication if they continue along that line. Yeah, I think it’s always a delicate balance and I don’t envy the CBN governor in this regard. It’s always a delicate balance and for most economists they will tell you that it is not easy. And I agree what you see when you are confronted with situations like this, you have to pick your choice, you have to be deliberate about what is critical for you. As an economist, I think that inflation is something that the CBN governor is trying very hard to manage. But probably if he pays more attention to those who are actively engaged in productivity those that can help him through their normal economic activities to go through this rough period and this uncertainty. If I win issues, I will pick my tank with the productive sector. I will do all that I can to reduce the pressures from inflation on the operations. I will do my best to ensure that, at least to their pain points, and even agree with them on target about how to get out of the situation.
Every option should be truly open and it should be more receptive of opinions that are coming from the private sector so that together we will be able to weather the storm together. It is not fair to deny the fact that it’s running a top economy just like most other parts of the world, but there is an opportunity for you to look inward and get those operators to be on your side so that you’re able to weather this storm together.
Thank you very much. I’m very happy to talk about it. I know we are celebrating our 50th AGM on the 17th, 18 and 19 October at Oriental Hotels in Lagos. And the theme is specifically choosing to fix the moment. We are looking at Alhaji Aliko Dangote, who is obviously the biggest manufacturer in Africa, telling what needs to be done to help Nigeria’s industrialisation in the next decade. And this is a good time. Because as we are transiting from one government to the other. This will provide a very rich opportunity for the aspirants to look into the solutions that is going to offer to our economic challenges that has limited industrialization. So that in their manifesto. They can reflect it and in the economic team to be able to understand what needs to be done to promote this sector that is so better. To job creation. Poverty eradication. Reflection of the economy. And ensuring that we get Nigeria working and working well again. So it’s actually crafted to suit the moment. And we are looking forward to using that advocacy platform to engage governments and other economic players so that we can hope to have at least the next ten years, we can have our development going northward.
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