Top chief executives of manufacturing companies in Nigeria say congested state of Apapa and Tin Can ports in Lagos, multiple taxation across the country, and high interest rates of available funds in deposit money banks are critical issues hurting the growth of industries.
Data from the Manufacturers CEOs Confidence Index (MCCI) for the third quarter of 2019, compiled by the Manufacturers Association of Nigeria (MAN), showed that 87 percent of CEOs of manufacturing companies in Nigeria agreed that the congested state of Apapa and Tin Can ports in Lagos was a big impediment to the growth of the industrial sector.
The CEOs, who were interviewed in the course of the report, said that congestion at the ports significantly affected productivity negatively with the prevalence of poor access and road network, heavy traffic and undue congestion at the ports.
“The slight improvement, notwithstanding, port related challenges are still present, particularly delay in clearance of imported raw-materials and machinery that are not locally available by manufacturers, including the associated high and unwarranted demurrage which oftentimes slows down manufacturing operations and increases cost of production in the sector,” the report said.
MAN recommended addressing challenges such as dilapidated infrastructure, inadequate space, weak trade facilitation infrastructure, poor road network and the associated gridlock to enhance competitiveness at the ports.
Apart from the congested ports, 89 percent of the chief executives identified multiple taxes and levies as big impediments to the growth of the industrial sector.
The CEOs said multiple taxes and levies depressed production in the manufacturing sector with records showing that manufacturers paid over 30 different taxes, levies and fees to agencies of the federal, state and local governments on account of increased revenue targets.
The report recommended harmonisation of various tax rates to encourage investment, particularly into the manufacturing sector.
Taiwo Oyedele, policy partner and West Africa tax leader for PwC, at a recent breakfast meeting, said that there were over 60 types of taxes in Nigeria.
Similarly, 82 percent of the CEOs flagged poor credit access as another impediment which decreased growth and productivity. The CEO-respondents said the rate at which commercial banks lent to the manufacturing sector discouraged productivity in the sector.
“There is the need for CBN to review the guidelines of the various development funds to ensure that the terms and conditions are liberal enough to attract borrowing from the industrial sector,” the report recommended.
Furthermore, 80 percent of the CEOs said the volume of commercial banks loans to the manufacturing sector would not encourage productivity in the sector.
“This highlights the need for the apex bank to improve and sustain the current policy aimed at increasing loans to the productive sector of the economy to stimulate national output,” the report said.
“No economy will grow when businesses get interest rate at a very high rate. What we need is a single-digit interest rate as manufacturers. We believe that this is what can stimulate growth,” Frank Jacobs, former president of MAN, told BusinessDay in 2017.
The Manufacturers CEOs Confidence Index (MCCI) was created by MAN to gauge the pulse of the economy on quarterly basis.
Gbemi Faminu
