Economy

Nigerian manufacturers warn of looming dangers of expensive diesel on economy

Published

1 year ago

July 12, 2022

The Manufacturers Association of Nigeria (MAN) has warned of the sharp increase in the price of diesel and its impact on the manufacturing sector and the economy is a danger signal for the country’s economy.

The Director General, MAN, Mr. Segun Ajayi-Kadir, stated this in a statement made available on Friday, called for urgent measures to address the matter.

“MAN is greatly concerned about the implications of the over 200% increase in the price of AGO on the Nigerian economy and the manufacturing sector. More worrisome is the deafening silence from the public sector as regards the plight of manufacturers,” Ajayi-Kadir said.

“We are concerned about the implications of the sharp increase in the price of diesel on the manufacturing sector” He added.

“The exertion of untold hardship on the manufacturing sector leading to the closure of many industries, leading to a reduction in capacity utilization, further decline in GDP, large scale unemployment across 76 sub-sectors and increase in the crime rate;

“Further decrease in foreign exchange earnings from the manufacturing sector as high cost of production feeds into export commodity prices, sharp reduction in government tax revenue occasioned by drop in sales, lower profitability as lesser quantum of disposable income will be available to purchase manufactured goods;

“Reverse-multiplier effect, as cost of production escalates and the headways already made in the sector are grossly eroded;

“Negative spiral effects on every sector of the economy, resulting in hyperinflation, lower productivity and turnover.” He stated

In view of the looming dangers, the manufacturers urged the government to issue licenses to manufacturing concerns and operators in the Aviation industry to import diesel and aviation fuel directly to avert the avoidable monumental paralysis of manufacturing activities arising from total shut down of production operations and movement of persons for business activities.

The group added, “As a matter of urgency, address the challenge of repeated collapse of the national grid (twice within a week), which is causing acute electricity shortage in the country, especially for manufacturers;

“Urgently allow manufacturers and independent petroleum products marketing companies to also import AGO from the Republic of Niger and Chad by immediately opening up border posts in that axis in order to cushion the effect of the supply gap driven high cost of AGO;

“Remove VAT on AGO as instant stimulus for immediate reduction in price and expedite action in reactivating or privatizing the petroleum products refineries in the country; and

“Front concessional forex allocation at the official rate to manufacturers for importation of productive inputs that are not locally available.”