By Chioma Obinna
Stakeholders in the manufacturing sector have identified the continuing rise in inflation and lack ofÂ infrastructural facilities as factors militating against the sector even as they declared that the nationâ€™s manufacturing sector has been operating in a sub-optional environment over the years due to various challenges.
The situation, which they described as â€œuncertaintyâ€ has culminated in short-term investment since long-term investment activities cannot be embarked upon by investors.
The Chairman, Board of Directors, Vital Products Plc, Alhaji Bashiru Aminu who spoke extensively, on the factors affecting manufacturing in Nigeria during the companyâ€™s Annual General Meeting in Lagos declared that the uncertain situation does not encourage savings, investment and economic growth. According to him, the manufacturing sector has been operating in a sub-optional environment over the years because it was confronted by various challenges.
Aminu traced the problems on what he described as the unfavourable Economic Community of West Africa States (ECOWASâ€™) Common External Tariff (CET) policies, adding that the policies are responsible for the loss of market shares by local manufacturers.
Lamenting the lack of infrastructure for effective manufacturing activities in the country, he said â€œEpileptic electricity supply, poor or non-existent water supply, high cost of telecommunication services and poor transportation system and network are the major infrastructural challenges facing the sector. These factors, for MAN, have combined to cripple a lot of firms while the few surviving ones operate under severe constraints.â€According to him, the countryâ€™s economic expansion has been non_oil driven through the agricultural sector.
Continuing, disclosed that the country has recorded strong economic growth of 6.3 per cent gross domestic product (GDP) despite the global economic.
â€œThe non_oil GDP reached 8.5 in 2008 andÂ inflationary pressures from the growth sectors were adequately controlled by a combination of fiscal and monetary policyâ€ he added.
He further lamented that the challenges in the sector are worsened by the global economic and financial meltdown which is beginning to threaten its very existence as the industrial sector appears to be one of the biggest victims.
Manufacturers are forced to depend on generators as a source of power supply and private power generating accounts for about 30 per cent of manufacturersâ€™ cost of production, Aminu added.
â€œFirms are forced to invest huge capital in alternative infrastructural facilities to run businesses thereby reducing their profitability and competitiveness. MAN also identified smuggling, exercise duty, port congestion, high interest rates, high exchange rate, inconsistence investment policies and depreciation of the Naira. These factors have combined to make Nigeria firms uncompetitive in the global market,â€ he said. Further giving insight into the performance of the company, Aminu said, Vital Products Plc recorded a turn over of N2.997 billion this year compared to N2.107 billion of 2008.
This, he said, is an increase of N890 million (42 per cent) during the year compared to the previous year. The company, Aminu said, made a profit before taxation of N454.345 million in the financial year ended on March 31 which is over 300 per cent than that of last year.