MAN advises FG on FOREX and credit allocation

Amidst renewed exchange rate pressure in the Nigeria’s troubled external sector, the Manufacturers Association of Nigeria (MAN) has recommended the setting of upper and lower band on exchange rate

They believe this measure would help boost the performance of the manufacturing sector in particular and the economy in general over the next one year.

Director General of MAN, Segun Ajayi-Kadir, stated this among other recommendations in response to media enquiry on the manufacturing sector’s outlook for 2024, adding that the government should prioritise forex and credit allocation to manufacturers, and the patronage of made-in-Nigeria products.

“The government should manage the floating exchange rate system within an acceptable lower and upper bound, pending the actualization of net-exporting economy aspirations; Prioritise forex and credit allocation to the manufacturers and reduce the number of BDCs into large and well-established operators to curb their excesses and untoward operations through effective management and supervision,” he stated.

According to Ajayi-Kadir, the sector is expected to experience a tough start in the first half of the year in line with the trajectory of manufacturing globally which portrays a struggling sector that is now more than ever challenged by key macroeconomic variables and externalities, leading to dwindling growth.

He however projected that the second half of year will see some measured improvements.

On other measures needed to improve the performance of the sector in the coming year, the MAN DG said the government should: “Expend cost saving from fuel subsidy to deploy a bouquet of production focused policies, backed with more structural measures to combat the peculiar inflationary pressures from insecurity, energy and transport cost; Overhaul the power sector and incentive investment in renewables to boost electricity generation and promote energy-cost efficiency.

“Give priority to patronage of made-in-Nigeria product in all its purchases and for all government contracts and projects, and mandatorily upscale patronage of made-in-Nigeria products by deliberately reducing the excessive reliance of the country on imported products. The three tiers of government should enforce the implementation of the Executive Order 003 for their ministries, departments and agencies.

“Encourage local sourcing of raw materials through comprehensive and integrated incentives to address the challenges of low productivity and imported inflation; and Encourage sub-national governments and private investors to leverage the opportunities provided by the Electricity Act 2023 to improve energy security in Nigeria.”

He added that the Central Bank of Nigeria (CBN) should develop a sustainable framework to channel credit interventions into the manufacturing sector, outside the direct intervention. “Additionally, it should mobilize commercial banks to intentionally provide long term single digit interest loans to the manufacturing sector to fast-track the actualization of a $1 trillion dollar economy,” he stated.

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