Despite interventions by the government, especially in the areas of ease of doing business in the country, local manufacturing remains challenged and overwhelmed by weak and frail performance outlook.
In their assessment of activities in the real sector, both the Manufacturers Association of Nigeria (MAN), and the Lagos Chamber of Commerce and Industry (LCCI) called for urgent government intervention in the real sector of the economy.
Already, local manufacturers have expressed declining confidence in the economy, and concerns over the rising cost of production and low competitiveness occasioned by government’s policies.
MAN noted that the poor performance in the productive sector was attributable to the general lull in the economy; absence of synthesized fiscal and monetary policies; poor performance of key macroeconomics fundamentals, the ever-increasing cost of production occasioned by the unfriendly operating environment and the heavy disruptions in the global value chain triggered by the trade war between two leading economies and the outbreak of COVID-19.
The operators then called on the federal government to declare a state of emergency in the manufacturing sector.
The declaration of emergency, according to MAN, would enable the government to study the current state of the manufacturing sector and craft sustainable stimulus packages to herald the recovery of the industrial sector.
On his part, Director-General of the LCCI, Muda Yusuf, while assessing the country’s socio-economic advancement since its return to Democracy years ago, said more should be done to improve the lives of citizens.
Yusuf observed that Nigeria has enjoyed 21 years of uninterrupted democracy, which has earned the country enormous goodwill as one of the few stable democracies in Africa.
The economy has also benefited from this goodwill, as investors are generally more comfortable with a democratic environment, but however, noted that core democratic values are yet to take firm root in the Nigerian democracy.
He identified areas that need to be rejigged to include, quality and independence of democratic institutions, electoral bodies, law enforcement agencies, Judiciary etc, separation of powers and the inherent checks and balances and accountability by the political leadership.
The DG noted that “While the growth of the manufacturing sector advanced to 0.77% in 2019 from -1.46% in 2015, present realities provide evidence that the sector failed to improve within the reviewed period due to myriad of challenges such as poor infrastructures, weak purchasing power, competition, high production cost, and unfavourable economic conditions.
“More importantly, the real economy (agriculture, manufacturing, trade and constructive) continues to underperform as a result of growth and productivity challenges. The impact of the 2016-17-naira devaluation also contributed to their poor footing.”
Yusuf again pointed out that data limitations constrained a quantitative assessment of the current administration’s performance in infrastructure.
Nonetheless, he observed that the state of physical infrastructure remains a challenge to socioeconomic development of the nation.
“Deplorable road networks, inefficient railway system, weak port infrastructures and epileptic power supply constitute significant cost pressures on businesses and corporates. This further resulted in weak global competitiveness of domestic firms and declining profit margin by investors in the country.”
He, however, noted the Federal Government’s resolve in improving the quality of infrastructure by constantly seeking liquidity to fund capital projects but added that the nations infrastructural challenge stems from the fact that government is spending far below the recommended $100 billion yearly required to finance our infrastructure deficit under the infrastructure master plan.
Yusuf said: “Worsening poverty poses a great deal of risk to the democratic process and the security of the nation. A strong economy driven by the private sector is fundamental to the building of strong democratic structures and processes. This is, therefore, the time to reflect on the critical gaps in our democratic structures and processes as well as our economic architecture.”
Continuing, he said, “The political leadership at all levels should rededicate themselves to the creation of enabling environment for private sector development with an emphasis on a number of factors.
These include streamlining the democratic structure for cost effectiveness and better economics; reduction in the cost of doing business through the provision of critical economic infrastructures; creation of a level playing field for all economic players; tackling corruption at all levels and spheres of the polity; strengthening macroeconomic fundamentals of the Nigerian economy.
It also said called for “Promotion of transparency and accountability in the conduct of government business; strengthening of national institutions; promotion of inclusiveness and engagement in the democratic process; development of human capital. The citizens also have an important responsibility to constantly engage the players in the political space for quality assurance in the political governance process”.