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Banks should give priority FX allocation to industrial sector —MAN President

By Yinka Kolawole & Naomi Uzor
As part of the Democracy Day celebrations on May 29, 2018, which also marks the third year of the Buhari administration, the President of Manufacturers Association of Nigeria, Dr. Frank Jacobs, in this interview with Vanguard, assessed the performance of the administration, impact of various policies on the manufacturing sector and his advice for the government going forward.

AS a key stakeholder in Nigeria’s economic development, what is your general assessment of the Buhari administration in the past three years?

Overall, speaking from the manufacturing perspective, I will rate the current administration above average. My assessment principally focuses on the crafting of robust economic policies, relative stabilization of foreign exchange rate, massive infrastructure upgrade, efforts aimed at improving the ease of doing business, improved consultation and partnership with the private sector to mention but a few.

It is, however, pertinent to understand that this administration came on board in May 2015 to meet the crashing crude oil prices in the international market, which enormously dislocated the economy as Foreign Exchange (Forex) inflow plummeted leading to acute shortage of Forex and erosion in the value of Naira. This dislocation, which is purely an external shock, was occasioned by the fact that Nigeria is an import and mono-product dependent economy. As is usually the case, a mono-product export and import dependent country is prone to external shock, particularly if no strategy is in place to mitigate such shock. That was exactly the situation for Nigeria when the price of crude oil fell in late 2014.

President of Manufacturers Association of Nigeria, Dr. Frank Jacobs

Understandably, the administration was compelled to take strict measures to stabilize the economy, particularly in 2016 which was the year the economy was thrown off-balance and into recession with  four straight negative quarterly growth rates of -0.36% in Q1; -2.06% in Q2; -2.24% in Q3;  and 1.30% in Q4. In that year, many business activities including manufacturing slowed significantly recording lower capacity, output, revenue and huge profit losses. However, as the economy exited recession and stabilized in 2017, businesses are beginning to gain momentum while manufacturing is gradually rebounding.

Can you point at any stand-out policy of the administration that has impacted your sector – positively or negatively?

I want to say that there are many good policies in Nigeria of which if well implemented, the country would be the cynosure to many countries including the advanced economies. However, I want to appreciate President Buhari for his encouraging responses during the trying period of forex shortage, particularly expressed through strategic support to the manufacturing sector.

An important action of the government was the convening of the quarterly meeting with the private sector where operating challenges are presented and approaches to resolving them proffered.  The approach has been successful as recommendations from the various engagements formed part of government policies that efficaciously led to a better performance of the economy in 2017. Some of the policies include: The 60% Preferential Forex Allocation to the Manufacturing Sector for importation of raw-materials and machinery that are not locally available which ended in 2017; Forex policy of February 21, 2017 resulting to CBN’s intervention in the Forex Market and establishment of Investors & Exporters Forex Window account for the stability in the market today; The Special $20,000.00 quarterly Forex Allocation to SMEs for importation of vital raw-materials and machinery which provided leverage for small businesses; Economic Recovery and Growth Plan (ERGP) which guided the economy out of recession; Adoption of the Nigerian Industrial Revolution Plan (NIRP) and the Inauguration of the Nigerian Industrial Policy and Competitiveness Advisory Council; Establishment of Presidential Enabling Business Environment Council (PEBEC) which improved Nigeria’s ranking in Ease-of-Doing-Business (EODB); The Federal Government Executive Order 003 and 005 which promotes patronage of made in Nigerian goods by Ministries, Departments and Agencies (MDAs).

Going forward, what advice would you give the government to advance the manufacturing sector?

The Association has appreciated the government at different fora for the continuous improvement in the Ease of Doing Business in the country. However, in view of the various challenges that still interplay in the operating environment, we still want the government to: Sustain the use of moral suasion to banks to give priority FX allocation for raw-materials, spare parts and machinery to the industrial sector so as to improve production; Implement the Steve Oronsanye Report on the reduction and re-alignment of government agencies and parastatals in order to streamline the number of taxes, levies, fees and administrative charges payable to them; Ensure the operability  of Independent Power Producers  (IPP) for On/Off grid power generation and  the Micro Grid Initiative

Engage in Public Private Partnership (PPP) programme through the establishment of Concession Agreements under Built-Operate-Transfer (BOT) in road construction and maintenance, rail construction and maintenance with credible organizations; Resuscitate domestic refining  of crude oil  in the country; Set up a formal structure for the private-public sectors to jointly monitor and evaluate the implementation of Executive Orders 003  and  005 of the Federal  Government on the patronage of made in Nigerian goods by  Ministries, Department, and Agencies (MDAs) of the Government as production without sales would not translate to improved performance; Commence  the  implementation of the harmonized taxes and levies project which should be monitored strictly by the Joint Tax Board (JTB) supported by representatives of stakeholders organizations with a view to enforcing compliance by States and Local Governments.


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