The Manufacturers Association of Nigeria (MAN) says that the manufacturing industry and not the services sector is essential for driving real economic growths .
Segun Ajayi-Kadir, the Director-General of MAN, affirmed this in reaction to the NBS GDP reports for the third quarter of 2024 in which the Services sector dominated the composition of the country’s GDP with widening gap.
In the reports, Nigeria’s economy recorded a significant improvement in the third quarter of 2024, with a growth rate of 3.46% compared to 2.54% in the same period of 2023 and 3.19% in the previous quarter. In the NBS analysis, based on sectoral performance, the services sector grew by 5.19 percent and contributed 53.58 percent to the GDP during the same period.
The industrial sector recorded a growth of 2.18 percent, an improvement from the 0.46 percent recorded in the third quarter of 2023.
Ajayi-Kadir noted that apparently, the service sub-sectors poses a significant drawback for the industrialization agenda of the Federal Government.
He explained:” In other words, as the services sector continually booms at the detriment of employment and production in the manufacturing sector, the economy is set to fail in its aspirations of reducing forex demand pressures, promoting value addition, generating mass employment, increasing export earnings, driving industrial-led growth, and ensuring sustainable development.
By implication, achieving a $1 trillion economy by 2026 is apparently difficult, as the growth rate clearly falls short of the 6 percent average targeted by the present administration.
“This meager growth highlights that the sector is being choked by interest rate hikes, high exchange rates, and escalated energy costs including devaluation of the Naira and monetary policy tightening.
… As the services sector continually booms at the detriment of employment and production in the manufacturing sector, the economy is set to fail in… its aspirations for promoting value addition, generating mass employment, increasing export earnings, driving industrial-led growth, and ensuring sustainable development
He said that for manufacturing to be ranked among the top five growing sectors, the government must take decisive action.He said that MAN recommends the following:
1. Create special windows for providing single-digit interest rates to productive sectors and relax stringent conditions for SMEs to access funding.
2. Retain the current excise duty of N10 per liter on non-alcoholic beverages to avoid shutting down the industry.
3. Recapitalize the Bank of Industry (BOI) to meet the growing credit demand of industries.
4. Implement the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee.
5. Review import duty rates for production inputs, particularly those not locally available, and consider pegging the rate at N800. 6. Direct the Central Bank of Nigeria to clear $2.4 billion outstanding dollar obligations on FX forward contracts to support manufacturers. 7. Review import duty rates for production inputs, particularly those not locally available, and consider pegging the rate at N800.