By Francis Akinnodi
An economic analyst, Dr. Chinyere Almona has disclosed, that Nigeria manufacturing sector is suffering from headwinds like scarcity of Forex for import of inputs, weakened consumer demand due to weak purchasing power, high energy cost, logistical challenges, policy uncertainties, and harsh regulatory environment.
Almona, who is the Director-General of Lagos Chamber of Commerce and Industry (LCCI), said this when discussing on a national television programme monitored by The Hope at weekend.
She said: “With lowering imports due to forex scarcity, local manufacturing could rev up in growth to meet the growing unmet local demand for hitherto imported finished products. With these factors persisting into 2023, we may likely record a growth in the sector away from the negative growth of -1.9% as at Q3 of 2022.
“However, this can only happen if we address issues like rising inflation, scarcity of FOREX, high energy cost, high interest rates, and logistics challenge due to insecurity in most parts of the country.
“In the case of subsidy removal by the new administration, we should expect some shocks to the economy in the short term with possibility of adjusted pricing and demand in response to market forces in the long run”.
She noted that the Dangote Refinery coming into operations by mid-year would boost production levels and support growth in the manufacturing sector.
“However, the contribution of manufacturing to GDP may fall from the 8.2% recorded during the third quarter of 2022 except the Government takes urgent and targeted financing support to critical productive infrastructure in the country.”
According to Almona, “For Nigeria, the base factors that may continue to drive the major economic indicators are the rising inflation rate, tight monetary policies, an unstable currency, foreign exchange scarcity, debt burden, currency management, food supply disruptions, exchange rate volatility, and election spending”.
She specifically said: “The Federal Government needs to sustain its targeted interventions in selected critical sectors like agriculture, manufacturing, export infrastructure, tackling insecurity, and free more money from subsidy payments.
“It is very imperative that we need sound monitoring and evaluation over the budget allocations to capital projects and defence spending to respectively tackle infrastructural deficit and the fight against insurgency. We urge the government to tackle oil theft to earn more foreign exchange, borrow from cheaper sources to reduce the burden of debt servicing, and pave way for the removal of the fuel subsidy by the incoming government.
“With increased spending by the government for census and general elections, the government must block revenue leakages, reduce costs, and empower the private sector to create jobs and generate more revenue to the government”.