Rising inflation: MAN task govt on price stability

COMFORT EKELEME

The Manufacturers Association of Nigeria (MAN) has express worry over the rising inflation in the country, saying there is an urgent need for government to intentionally ensure price stability before the situation becomes deplorable.

MAN noted that the 18.17per cent inflation rate is not healthy for the well-being of the people and the growth aspiration of the economy.

In his reaction to the nation’s inflation rate, Director General of MAN, Segun Ajayi-Kadir said the news of rising inflation in a a country that is only recovering from a recession is worrisome.

He said the manufacturing sector posted a growth rate of   -1.51 per cent in the fourth quarter of 2020 from -1.52 per cent in the third quarter of the same year, adding that the current inflationary condition in Nigeria is adversely affecting the profitability of the manufacturing sector and is partly responsible for its competitiveness.

Ajayi-Kadir advised the government to pursue consumer price stabilization measures that will stimulate growth in agricultural output, deliberately support the manufacturing sector to guarantee an improved output that can engender the reduced intensity of too much money chasing after fewer goods, further, diversify the country’s revenue sources.

Speaking further, he stressed the need for a Central Bank of Nigeria (CBN) sustainable plan to improve the external reserves to a defensive capacity that will raise the months of imports of Nigeria to a dependable level.

He said this can be achieved by deliberately and sincerely partnering with the productive sector to grow non-oil export.

“The Federal Ministry of Finance (FMF) and CBN should work more closely when designing policies that affect the real sector of the economy. This is to prevent a situation where policies are working at cross purposes. For instance, while CBN was creating funding windows at single-digit interest rates to encourage production, Government increased Value Added Tax (VAT) from 5per cents to 7.5per cent. Similarly, Government increased the minimum wage and also allowed an increase in electricity tariff, and so on.

 “Government, in partnership with the manufacturers should select strategic products, particularly those with high inter-industry linkage, for backward integration support and upscale the drive for the resource-based industrialization agenda.

“Give priority allocation of forex to manufacturers to import inputs that are not locally available and for which there are no immediate plan or resources to produce locally. Since policies are dynamic, they could change as soon as we develop local capacity,” he said.

According to him, there are quite a number of moribund industries in the country, stressing that there should be an industrial clinic to engender their resuscitation in order to boost output and ultimately achieve price reduction.

Ajayi-Kadir further noted that “It is evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like an exchange and interest rates. Therefore, the immediate government should assist manufacturing productivity with credit at a competitive price. This could be in the form of enhancing existing special credit windows or creating additional ones for this important sector of the Nigerian economy.

He said there is a need to give effect to these measures immediately as the current security situation and the continued incidence of COVID-19 is negatively impacting businesses and lowering their resilience capacity.

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