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  • Exhibitors seek support for local manufacturers

    Exhibitors seek support for local manufacturers

    Exhibitors at the Food and Beverage West Africa 2025 Conference in Lagos have called on the Federal Government to deepen its support programmes for  indigenous manufacturers to enable them double their production and contribute significantly to the industrialisation schemes of the country.

    Speaking at the on – going food , beverage show on the continent , they said Nigeria’s strategic location and market potential need to be fully exploited as a frontier market as companies across the globe throng into it to survey product needs and how to penetrate their distribution.

    Exhibition Manager , Brad Smith said the gathering has not only brought together over 350 international companies from over 50 countries, but has served as a platform for manufacturers from different continents to seal manufacturing deals, distributorship and other trade relationships with Nigerian companies and businesses.

    Smith said the over 6, 000  attendees at the exhibition are also using the opportunity to gather market information on product needs , investment decisions and other vital information they could leverage to expand their business frontiers.

    He spoke of securing the approval of the relevant regulatory agencies in Nigeria , including NAFDAC and others on the requisite standards of the product on display.

    He said they firm organising the exhibition is looking forward to expand conversations with the Federal Government on ways more indigenous companies could be supported to bring their product  for exhibition for the global market , saying the conference will continue to serve as a forum to bring manufacturers, distributors, investors and consumers together to contribute exponentially to the country’s economic development.

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    Smith said : “ Boosting the economy of Nigeria depends on a lot of factors, part of which is the development, production of new products . That is why for many years, we have been bringing manufacturers together through our exhibition to exchange ideas, seek new ways of product design, understand the market demands , through opportunities for partnership and growth.

    “ This has brought about different product scope and innovation. We will continue to attract the attention opf the Nigerian government to further develop this value chain. “

    Also speaking , Immanuel Linggal,  an exhibitor from Indonesia described Nigeria as a huge market with vast opportunities and economic partnership  that many countries continue to cultivate.

    He said Indonesian firms will stop at nothing to explore joint ventures with Nigerian companies to expand market access and product penetration.

    Another exhibitor, Chrajit Pakrasi, from Venus Processing and Packaging said the firm was excited to participate in the conference to explore windows for product demonstration in the agricultural value chain, where it is uniting farmers with manufacturers and consumers of organically packaged products.

    A player in the financial technology space and Chief Executive Officer of Klak, Seun Ayegbusi said the company participated in the conference to create a window to unlock efficiency in streamlining payments for transactions that cut across boundaries.

    He said when large transactions take place during exhibitions, it becomes compelling to create platforms that will manage business processes, foster payments .”

    The West African food and beverage market is worth $325.84 billion  according to Statista. This is expected to grow at an annual rate of 9.89 per cent  between 2025 and 2030.

    The food services market itself reached  $6.2 billion in 2024 and is projected to reach $11.4 billion by 2033.

    Nigeria is the fastest growing economy in Africa, with a projected annual GDP growth rate of 4.2 per cent  in the period 2016-2050. This will push it up the GDP rankings to become the 14th largest economy in the world by 2050, according to IMF and PwC estimates.

    The population, currently around 230 million, is expected to double over the next 30 years, at a population growth rate averaging around 2.3 per cent a year. For what has been a young country, Nigeria is now entering a period of strong growth in the working age population.

    Although the government has implemented a wide range of bills to increase local manufacturing, Nigeria still heavily relies on the importation of food and beverages.

     In Q1 2024, the import bill stood at N12.64 trillion, with food imports accounting for approximately 12.59 per cent of this total.

  • Manufacturers’ lament

    Manufacturers’ lament

    • The problems require fresh thinking

    For Nigeria’s manufacturers, the perennial nightmare over multiple grid failures and unbearably high energy costs, far from over, have actually worsened with the situation costing the sector N1.11 trillion in alternative energy bills last year alone. The figure, as reported in the Manufacturers Association of Nigeria (MAN) Economic Review, not only revealed a significant increase of 42 per cent from N781.7 billion spent in 2023 but a quantum leap by 1,475% over a four-year period.

    Worst hit, according to MAN, is the food, beverage and tobacco sector with expenditure in alternative energy shooting up to N229.41 billion from the 2023 figures of N182.76 billion.

    For the chemical and pharmaceutical sector, energy costs reportedly doubled to N208.68 billion, with non-metallic mineral products sector’s energy costs increasing by 33.7 per cent to N118.49 billion. For the textile, apparel and footwear sector, the cost of alternative energy also shot up to N26.45 billion in 2024, from N6.97 billion in 2023.

    To MAN’s Director-General Segun Ajayi-Kadir, although the electricity supply situation to industries actually improved somewhat, with average daily supply increasing from 10.6 hours in 2023 to 13.3 hours per day in 2024, the surge in tariffs by over 200 percent for ‘Band A’ consumers significantly increased manufacturing costs, just as frequent outages and grid collapses remained a major source of concern.

    The above is however not the only headache that the manufacturers had to contend with in the past year. Rising interest rates in particular – a direct fallout of continual Central Bank of Nigeria’s (CBN) rate hikes – would equally pose a major burden. MAN reported commercial bank lending to manufacturers at 35.5 percent rates in 2024, up from 28.06 percent in 2023, thus raising the sector’s finance costs to N1.3 trillion, further constraining their investment and expansion plans.

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    While investment overall, reportedly fell by 35.3 percent year-on-year to N658.81 billion in 2024, no less lamentable is the employment situation as the number of employees that left manufacturing companies was said to have increased from 17,364 in 2023 to 17,949 in 2024, a record labour loss of 35,313 in two years.

    To be sure, none of the factors highlighted by MAN could be said to be either entirely new or not already well documented. They amount – at the very best – to a re-presentation of an old plague. Is it the story of how the nation has remained at virtually the same level despite the stupendous expenditures poured into the sector since the Obasanjo era and the reforms that attenuated it that is new? Or could Nigerians be said to be unfamiliar with the continuing underinvestment, under-capacity and outright corruption still plaguing the sector, the result of which the manufacturing sector has remained ill-served, with the broad spectrum of the society left to put up with rationalisations following promises that came to naught?

    What of the inflation-targeting policies of the CBN that have driven interest rates to stratospheric levels, which, when combined with the power stasis, are at the heart of the manufacturers’ legendary lack of competitiveness? Or the story of the massive influx of cheap, mostly inferior goods from Southeast Asia that continues to undermine local capacity?

    The issues at stake, which are age-long and hence familiar, obviously go beyond the annual rites of lamentation. If we may dare say – not only do the problems require fresh thinking, they are such that call for bold and adroit measures both by the government and the apex bank to reverse.

    In the circumstance, our call, which isn’t exactly a new one, is for the protection of the manufacturing sector and ensuring that the environment is made as competitive as it could be to make the sector thrive.

  • Manufacturers call for reconsideration of proposed 15% hike in port charges

    Manufacturers call for reconsideration of proposed 15% hike in port charges

    • High costs detrimental to economy

    The Manufacturers Association of Nigeria (MAN) has implored the Nigerian Ports Authority (NPA) to pull the breaks on the proposed 15 per cent increase in port charges and instead, collaborate with stakeholders to explore sustainable alternatives for revenue generation.

    MAN argued that increasing tariffs in the current economic climate will have dire consequences, including increased cost of production, leading to higher prices of goods and fanning inflation; and reduced competitiveness of Nigerian manufacturers in local and international markets.

    The NPA had at a recent maritime stakeholders’ meeting in Lagos announced a 15 per cent upward review of its port charges, citing the need for competitiveness and infrastructural development. It was its first tariff adjustment since 1993.

    NPA Managing Director Dr. Abubakar Dantsoho explained that the new rates were necessary to improve Nigeria’s ports, aligning them with global standards in terms of infrastructure and equipment.

    However, the move did not go down well with MAN, with its Director General, Segun Ajayi-Kadir, expressing worries that the proposed 15 per cent tariff hike will increase smuggling, due to high costs at Nigerian ports compared to neighboring countries and also force decline in government revenue due to lower cargo turn out and manufacturing downturn.

    The MAN DG, in a statement over the weekend, said: “Rather than imposing additional financial burdens on businesses, we propose a stakeholder dialogue to explore strategies for enhancing port efficiency, reducing operational bottlenecks, and creating a more business-friendly environment that will ultimately lead to increased revenue without undermining industrial growth and competitiveness.”

    He insisted that “The manufacturing sector can ill-afford such an increase at this time; it runs against the present administration’s efforts at making Nigeria a trading hub in the West African sub-region, and would definitely constitute a drag in the efforts of government to stabilise the economy in the year 2025”

    MAN said ports are the gateway to international trade and play a crucial role in the efficiency and cost-effectiveness of business operations. Citing the United Nations Conference on Trade and Development (UNCTAD), it noted that 80 per cent of Nigeria’s traded goods are transported by sea, with 70 per cent of total imports and exports in West and Central Africa destined for Nigeria.

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     “This underscores the critical role Nigerian ports play in facilitating trade and industrial productivity,” Ajayi-Kadir stated, pointing out that for manufacturers, port-related charges constitute significant indirect costs, as most raw materials and industrial machinery are imported through these ports.

     “Any increase in charges will have a ripple effect, leading to higher production costs, increased inflationary pressures, and reduced competitiveness of locally manufactured goods.

    “Many manufacturers who operate as tenants in NPA facilities will also face escalated costs, which could significantly disrupt the slight moderation in the mounting challenges that has bedeviled the manufacturing sector in recent times,” the MAN DG kicked.

    He said NAN earnestly advocates for caution and deep reflection on the part of the NPA, as a key stakeholder in Nigeria’s economic development, noting that NPA’s consultation with key economic actors after it has decided on the increase is tantamount to putting the cart before the horse and does not demonstrate goodwill.

    MAN, therefore, called on NPA to rescind the planned increase in order to avert a monumental downturn in the fortunes of businesses in Nigeria, pointing out that having consulted widely with its members across the country, there are grave concerns over the proposed 15 per cent increase in port-related charges by the NPA.

     “At a time when businesses are struggling with the rising cost of operations, high rate of foreign exchange, astronomical energy costs, and general economic uncertainties, imposing additional financial burdens on manufacturers through increased port tariffs will exacerbate the challenges faced by the real sector,” Ajayi-Kadir emphasised.

    He said while MAN acknowledges the need for revenue generation, increasing port tariffs could be counter-productive in the long run. According to him, the real issues affecting port revenue include port congestion and inefficiency; as such, reducing turnaround time for vessels and improving cargo clearing processes can significantly boost revenue.

    While identifying high demurrage charges as another issue affecting port revenue, he said addressing bureaucratic bottlenecks that delay cargo clearance will ensure faster throughput and more efficient revenue collection.

    Another alternative approach to revenue generation, MAN suggested, is by improving port infrastructure to enhance operational efficiency and attract more business, leading to natural revenue growth.

    The other viable option, according to MAN, is through competitive pricing strategies. “ Instead of raising tariffs, aligning Nigerian port charges with global best practices will encourage more trade volume and increase overall earnings,” it added.

  • Manufacturers seek transparency in power tariff structure

    Manufacturers seek transparency in power tariff structure

    The Manufacturers Association of Nigeria (MAN) has called on the Federal Government to conduct a transparent review of the electricity tariff structure, saying that the 250 per cent increase in electricity tariff by the Electricity Distribution Companies (DisCos) significantly raised manufacturers’ cost of electricity.

    MAN also said this, coupled with on-going power outages, placed additional financial strain on the manufacturing sector. It, therefore, said a transparent review of the electricity tariff structure, among other key actions, will ensure electricity tariff reflects the true cost of production while being fair and sustainable for both businesses and consumers.

    Speaking at a forum in Lagos, recently, MAN Director General Segun Ajaiyi-Kadir lamented what he described as “lack of tariff transparency’ in the Nigerian Electricity Supply Industry (NESI) and called for increased transparency in electricity tariff changes, as well as introduction of outage compensation mechanism.

    He specifically said as part of key actions to revitalise the industrial sector this year, the Federal Ministry of Power should develop a framework for stakeholders’ engagement on power tariff structure adjustment and for offsetting the effect of tariff hike on manufacturing in Nigeria.

    According to the MAN DG, electricity supply to industries showed some improvement in the first half of last year (H1 2024), with average daily supply hours increasing to 11.28 hours per day. He, however, regretted that the increase in electricity tariffs by 250 per cent by DisCos significantly raised the cost of electricity for manufacturers.

    Unsurprisingly, the cost of providing alternative power continued to rise, with manufacturers, according to Ajaiyi-Kadir, spending N238.31 billion on alternative energy sources in H1 2024, a 7.69 per cent increase from H2 2023.

     “The surge in costs was driven by higher prices for diesel, gas, and other energy sources, as well as the need for manufacturers to invest in self-energy generation due to unreliable power supply from the national grid,” he said.

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    He listed other options to overhaul the energy sector to include incentivising investment in renewable energy, facilitating investment in the modernization and reinforcement of the power infrastructure, including feeders, transformers, and distribution networks, to reduce technical losses and improve the reliability of power supply.

    Ajaiyi-Kadir also urged the Federal Government to direct the Nigerian Electricity Regulatory Commission (NERC) to review the high electricity tariff for Band A Customers as no manufacturer has access to the stated 20 hours minimum of electricity supply per day.

    He also wants government to commence the effective implementation of the Electricity Act 2023 by judiciously utilising the N115 billion Federal Government-United States Agency for International Development (USAID) deal to support the private sector and address some of the longstanding challenges.

    The MAN boss further canvassed encouragement for sub-national governments that have keyed into the constitutional amendment that guarantees entry into the energy sector; ensure the connection of all consumers to the electricity grid through adequate metering to avoid free riding and unfair charges on the few connected consumers.

    He also called for reduction in energy transmission and distribution losses by adopting modern technologies such as smart sensors and machine learning algorithms for rapidly predicting and detecting technical faults to enable quicker repairs.

    Other recommendations include the prioritisation of the domestic supply of gas to make it more accessible for local manufacturers and enforce the pricing of domestic gas supply in Naira as it is only a fraction of gas export; refocusing the Gas Master Plan to ensure sufficient supply of gas for power generation.

    Ajaiyi-Kadir, in pushing for these reforms, said Nigeria’s path to sustained industrialisation and steady economic growth remains threatened as little to no attention is given to the numerous pressing challenges that limit the performance of the manufacturing sector—a sector widely regarded as the driver of economic growth and sustainable development.

    He said undoubtedly, a rapidly growing economy is only achievable when the binding constraints hindering the performance of the manufacturing sector are confronted head-on, noting that in this regard, the Federal Government should, among others, conduct a transparent review of the electricity tariff structure.

  • Manufacturers consolidate trade relationships at Lagos conference 

    Manufacturers consolidate trade relationships at Lagos conference 

    Manufacturers of body care, cosmetic/beauty and allied products have in the last three days in Lagos been exploring opportunities to deepen trade relationships with prospective partners as the Beauty West Africa Exhibition and Conference draws to a close.

    Beauty West Africa, the continent’s largest and most popular trade show for the beauty, cosmetics, and hair industry, opened on Tuesday, 26th November for its seventh successful consecutive year.

    The event showcased more than 300+ exhibitors from around the world, a free-to-attend conference, seminars, demonstrations, and hundreds of product launches.

    The  2024 edition of the trade show recorded a huge  number of visitors  at the Landmark Centre, Victoria Island, Lagos.

    Among the  exhibitors were delegations from  China, Turkey, Pakistan, Korea, Egypt, and Malaysia, India, Europe, the United States, and the Middle East, who staged country pavilions.

     There was also a spotlight on Nigeria and West Africa’s own beauty SMEs.

    The conference was full of key beauty industry experts, including a keynote speech from Ifeanyi Chukwunonso Okeke – Director General, Standards Organisation Of Nigeria (SON) – The importance of standards and public-private collaboration in nigeria’s beauty industry – plus the official Inauguration of the new Beauty West Africa ‘Leaders Club’ was officially announced. 

    Official conference partners were Beauty In Lagos and Founder, Ezinne Alfa welcomed visitors, as well as running several panel sessions.

    Speaking at the exhibition, Alfa said the exhibition provided an opportunity for players in the beauty and allied sectors to gain knowledge and deepen their understanding about entrepreneurship.

    She said the exhibition also provided an opportunity for players in the sector to re- examine issues bordering on the enforcement of standards in the industry.

    Alfa said: “So far, so good the Beauty West Africa Exhibition has been a good outing because it provided an avenue to get stakeholders input on how to develop the sector. Significantly, it provided players in the sector the opportunity to look at pain points and how the enforcement agencies could address the issues pointed out. It has been a significant outing to educate investors into the sector.”

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    Speaking on their participation at the exhibition, Marketing Manager Lush Hair, Vivian Obiano, described Beauty West Africa as a platform for the company to showcase its products, which exemplifies the essence of its existence.

    Obiano said Beauty West Africa Exhibition , provides yet another opportunity for the company known for its hair extension brands  to leverage its visibility and consolidate its hold in other countries within and outside the sub region.

    She said: ” We are expanding our footprints through participation in this exhibition to show how our products signposts confidence for women.”

    She said the company looks forward to opportunities to sign on distributors, wholesalers and other trade partners willing to do business with the company.

    On his part, Mr Cem Uysal, from the World Expo Exhibition from Turkey, said the country participated in the trade show in order to deepen its trade relationship with Nigeria.

    He said though 19 Turkish Groups were at the exhibition this year to seek business from Nigeria, plans are afoot to increase the number t0 40 companies next year.

    Saheed Rahmon from WAHL, which specialises in clippers and other hair cutting appliances said Beauty West Africa Exhibition , provided an opportunity for the over a century old company to analyse trends and evolving technology in the industry.

    Its Sales Manager said: ” We got more contacts at the Beauty West Africa Exhibition. Besides, we signed agreements with distributors, analysed trends in the industry and offered training programmes for barbers.”

  • Manufacturers, experts chart path for economic growth

    Manufacturers, experts chart path for economic growth

    For manufacturers, an intentional policy response by government, working with critical stakeholders, to tackle the myriads of challenges hurting the manufacturing sector’s growth and competitiveness has never been this imperative. With the sector currently on the downward trend, unable to propel job creation, economic growth and development, the need to deliberately and urgently address it’s litany of woes has taken centre stage. Accordingly, experts and operators seized the platform of this year’s Annual General Meeting of the Manufacturers Association of Nigeria to chart the way forward for the beleaguered sector. Assistant Editor CHIKODI OKEREOCHA reports.

    As President/CEO of the Africa Finance Corporation (AFC), a pan-African institution that catalysis private sector-led infrastructure investment across the continent, Mr. Samaila Zubairu, is evidently in a vantage position to know what holds the Nigerian manufacturing sector down from becoming productive and globally competitive; he also knows what must be done to turn the sector’s fortunes around.

    So, when Zubairu, last week, reeled out depressing statistics indicating the manufacturing sector’s less than sterling performance, including Nigeria’s poor showing in continental and global trade, and also proffered ways to change the narrative, the AFC boss rekindled the optimism of his audience that Nigeria will be, in his words “Successful in overcoming the challenges.”

    The occasion was the fourth Adeola Odutola Lecture/Presidential Luncheon organised by the Manufacturers Association of Nigeria (MAN) with the theme, “The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector,” where Zubairu, as Guest Speaker, said, for instance, that the share of manufacturing in Nigeria’s Gross Domestic Product (GDP) of $477 billion as at 2023 is 12 per cent, compared to Germany or South Korea’s 30-40 per cent.

    Describing the manufacturing sector’s contribution to Nigeria’s GDP as “very meager,” Zubairu, whose presentation was delivered on his behalf by an Executive Director at AFC, Shameh Shamonda, said manufacturing, which grew a bit in 2021, is now flat, even as Foreign Direct Investment (FDI) into the manufacturing sector is also significantly lower than it was before. He attributed the downward slide to the current high exchange rate and interest rate.

    The Lecture, which was held last week Thursday, at Lagos Oriental Hotel, was the third and final leg of 3-day activities marking the 52nd Annual General Meeting (AGM) of MAN, with Zubairu, who has been in charge at the AFC for the past six years, also lamenting Nigeria’s trade statistics. “Another shocking statistics is that 15 per cent of total trade in the continent is intra-African, 85 per cent of the trade is always with the outside the world,” he revealed.

    “We cannot even trade among ourselves,” the AFC boss regretted, insisting, therefore, that “The African Continental Free Trade Area (AfCFTA) agreement has to be developed and prioritised because you have so many countries next door, but you (Nigeria) still decide to import from Europe, from the U.S or export. It doesn’t make sense. Something has to change.”

    Some of the things that must change if Nigeria must birth a thriving manufacturing sector, according to Zubairu, include investments in core infrastructure sectors of power, natural resources, heavy industry, transportation, and telecommunications; prioritisation of value addition to exportable raw materials, and leveraging mining and other non-oil sectors to diversify the economy away from its over-reliance on oil.

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    He listed others to include influencing the government to emplace a regime of clarity on its policies, finding ways to reduce cost of borrowing, finding the right projects that are priority for the country and its people. He also stressed the need to halt gas flaring and the captured gas harnessed to provide electricity. “All the gas that is being flared has to be captured,” Zubairu said

    For a start, the AFC chief did not mince words when he said “You cannot have industry without infrastructure that supports it,” He said it was in recognition of the role of supportive infrastructure in galvanizing industrialisation that the AFC was formed as a full-fledged financial institution separate from the government that works on bridging the infrastructure gap across the continent.  

    According to Zubairu, former Nigeria’s President Olusegun Obasanjo had, 17 years ago, looked at the state of Africa with a few other Heads of State and said there is a huge gap in infrastructure in Africa. “We cannot grow as a continent and we cannot compete with the world if we don’t bridge the infrastructure gap,” he quoted Obasanjo as saying.

    In line with the AFC’s mandate of directing investments into transformative infrastructure, Zubairu said the Corporation, which was created 17 years ago from capital mostly from the Central Bank of Nigeria (CBN), has invested $13.5 billion across different sectors in infrastructure in Africa, with a lot of the investments in Nigeria.

    While noting that the AFC is the second highest rated financial institution in Africa by global rating agency Moody’s, he said the Corporation has invested in 36 out of the 54 African countries. “We have covered around 80 per cent of Africa in terms of our investment so far,” Zubairu revealed, noting, however, that “The weight of our investment in Nigeria is higher than any other country, at 24 per cent last year.”

    He reiterated that “Nigeria is our host country and the largest shareholder of our institution is the Central Bank of Nigeria (CBN). WE have a well-diversified portfolio in Nigeria than the rest of the continent. We are a pan-African institution, but we are hosted here in Nigeria so, we do more in Nigeria than any other country.” 

    Prioritise value addition

    Speaking to the imperatives of an intentional development of the manufacturing sector, Zubairu said the issue of beneficiation, sometimes used interchangeably with value addition is “Very dear to my heart and it is linked to what you (manufacturers) are doing.”

    He said the practice of exporting abundant raw materials in Nigeria and other African countries without adding value to them must give way for some form of beneficiation, i.e. transformation of the raw materials to higher value products for local consumption or export.

    “Africa is endowed with a lot of resources, what we are doing wrong is that we are exporting the raw materials,” the AFC CEO said, citing electric vehicle as an example of how Nigeria and other African countries fritter away their resources. According to him, two per cent of the electric vehicle seen on the street comes from Africa because the continent has 30-40 per cent of the lithium and all the ingredients that go into the battery.

    The problem, he said, is that these raw materials (lithium for making battery) are exported all the way to China, which controls 80 per cent of the electric vehicles manufacturing capacity in the world. His words: “The Chinese produce the electric car and sell it back to Europe and the U.S. From the mine until you build a car, there are six steps. The first step which is mining is 2-3 per cent, which is what you see in the car as the African contribution.

    “Steps 2 and 3, which is the refining of the product, and another step, you capture 40 per cent of the value of the product. When you start with the first two steps, you capture 40 per cent instead of two or three per cent. What is happening now is effectively you get the products out, you export all the way to China and they send them back and they capture all the value. This applies to every single thing we have in Africa.”

    ‘Pursue diversification with vigour’

    Zubairu also said economic diversification has never been more compelling. According to him, it is one sure way to drive Nigeria’s GDP growth, which is at present, very heavily reliant on oil. He said as much as 90 per cent of Nigeria’s export is oil, and the challenge is, therefore, how do diversify that to other sources or sectors.

    “Everyone is focused on oil, but Nigeria has one of the largest and best quality lithium deposits in Africa, for instance, but no one is looking at mining because oil is sucking up all the energy and all of the investments. So, we are trying to diversify the economy and we are working with the Solid Minerals Development Fund (SMDF) to work with local developers on developing their mining concessions,” he said.

    The SMDF is a sovereign Fund established by the Federal Government to drive and catalyse private sector-led investments in Nigeria’s mining sector. Its objectives are to actively pursue investments that will de-risk the mining sector, to be the partner of choice for opportunities, and to empower the economic development and diversification of the Nigerian economy through the mining sector.

    The AFC has been in a transformative partnership with the SMDF to derisk Nigeria’s mining sector and scale up artisanal miners in the country to an industrial level of operation. The strategic collaboration also seeks to address the dearth of expertise and funding for early-stage mining projects, paving the way for these projects to reach financial close and full-scale operations.

    Zubairu gave more details: “We are working with the SMDF to work with local developers on developing their mining concessions. Some of them have the money to develop but haven’t developed before. Some of them don’t have the legal knowhow to negotiate with concessionaires.

    Some of them have the technical capabilities but don’t have the funding. “So, we play that role of plugging all these gaps and working in partnership with the developers of these mines and the SMDF, and we are happy to take early stage risk and spend early stage money to get the projects to bankability.”

    Halt gas flaring also

    The AFC boss also said Nigeria, an oil producing nation, must work on her lack of clarity of policy procedures particularly with regard to ensuring that all the gas that is being flared is captured and put to other uses.

    Zubairu is right. Between 2020 and 2024 alone, gas valued at $1.9 billion was flared in Nigeria, according to a report by the Nigerian Gas Flare Tracker. The report stated that during this period, 595.1 million standard cubic feet of gas were flared in nine states of Rivers, Delta, Imo, Edo, Akwa Ibom, Bayelsa, Anambra, Abia and Lagos.

    Indeed, gas flaring remains a sore point in Nigeria, with the country ranked top 10 gas-flaring countries in the world, with 7.4 billion cubic feet in 2018. The report said the total gas flared in Nigeria accounted for 6.9 per cent of the top 10 gas glaring countries in 2018.

    Sadly, gas flaring continues, despite persistent cries of gas scarcity by electricity-generating companies (GenCos). The report noted that the power generation potential of the gas flared was 59.5GWh. Currently, gas-fired power plants in the country are operating far below capacity due to gas shortages.

    MAN President Otunba Francis Meshioye, earlier in his welcome address, set the tone for what turned out to be a robust conversation on how to find solutions to problems inhibiting the manufacturing sector’s growth.

    He said it was concerning that the manufacturing sector continues to navigate uncharted waters caused by irrefutable domestic economic challenges emanating from unbearably high inflationary pressures, currency fluctuations, skyrocketing energy and input prices.

    Meshioye listed other challenges to include forex scarcity, infrastructural deficiency, low patronage, stiff regulatory hurdles, multiple taxes, negative perception of made-in-Nigeria products, categorization of industrial has users as commercial sector and inadequate supply of gas to manufacturing facilities, among others.

    The MAN President explained that the theme, ‘The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector,’ was carefully thought out and crafted to reflect the manufacturing sector’s ongoing struggles and challenges, including rising costs that have affected profitability and the survival of many manufacturing firms.

    According to him, the challenges made it imperative for MAN “To advocate for a deliberate and concerted approach toward the development of the sector,” He emphsised that “By developing our manufacturing capabilities and leveraging its potential, we can reduce inflation and our dependence on imports, promote substitution, and create more jobs.”

    He also said the sector, if developed, will boost government revenue, strengthen and improve the forex market. “Our businesses have been heavily impacted by the macroeconomic and policy environment in which we operate,” Meshioye said.

    As he added, “We need to urgently address the binding constraints that make our local products uncompetitive; otherwise, the economy may continue on a downward trend with no certainty of when it will rebound.”

    MAN Director General Segun Ajaiyi-Kadir summed up what appears to be the central message at this year’s engagement, and the consensus of various stakeholders, saying, “Manufacturing is a strategic choice for a progressive country.

    “You manufacture to prosper or fail to do so and reap joblessness and poverty, decreased fiscal income, vulnerability to global market shocks, reduced GDP growth and balance of trade deficit. That’s the choice Nigeria has to make.

  • Manufacturers proffer solution to economic challenges

    Manufacturers proffer solution to economic challenges

    Manufacturers Association of Nigeria (MAN) has said for Nigeria to overcome its economic challenges, government must take steps such as promotion and priotising consumption of locally produced goods.

    It said this would ease demand of foreign currency tied to imports, strengthen local manufacturing, expand production capacity and create more jobs to address unemployment.

    Speaking in Ibadan, Oyo State capital, at the weekend, at the 41st Annual General Meeting (AGM) of MAN, Oyo, Osun, Ondo and Ekiti branch, the outgoing Chairman of the branch, Lanre Popoola, said government must promote non-oil export, secure steady foreign direct investment and remittance inflow, as well as prioritise manufacturing by provision of single digit loan to bona fide manufacturers verified by MAN.

    Speaking about the theme of the event, ‘Re-Igniting Industrialisation and Promoting the Tenants of National Action Committee on African Continental Free Trade Area (AfCFTA) in the South-western Region’, Popoola said although AfCFTA was a national affairs, the state government also had a role to play, as companies needed support to meet local demands and export to other countries.

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    MAN President Francis Meshioye, represented by Director General Segun Ajayi-Kadir, said although current economic challenges had affected the manufacturing sector, MAN would partner with governments towards the development of the economies of Oyo, Osun, Ondo and Ekiti states.

    The event was attended by the Executive Secretary, AfCFTA, Oluwasegun Awolowo, Osun State Commissioner for Commerce and Industry, Rev. Bunmi Jenyo, representatives of Ondo, Osun and Ekiti state government branch executive committees and MAN council members, among others.

    At the event, new executives of the branch were elected. Dr. Samuel Olawuyi emerged as the new branch chairman.

  • Manufacturers explore ways to growth

    Manufacturers explore ways to growth

    Nigeria’s high and rising cost environment continues to shrink manufacturers’ profitability and, in many cases, threaten the existence of many operators in this critical sector of the economy.

    More worrisome is the fact that the manufacturing sector that should propel job creation, productivity, and economic growth is enmeshed with series of challenges that constantly limit its contribution to the Gross Domestic Product (GDP).

    Speaking at a media briefing in Lagos, ahead of the 52nd Annual General Meeting (AGM) of Manufacturers Association of Nigeria (MAN), the Association’s President, Otunba Francis Meshioye, said this was what informed the choice of the AGM’s theme, “The Imperatives of an Intentional Development of the Nigerian Manufacturing Sector.”

    He said there is need to urgently address the binding constraints that make local products uncompetitive, otherwise, the economy may continue on the downward trend with no certainty on when it will rebound.

    “The choice of the theme for this year speaks volume about our direction and resolve to birth a thriving manufacturing sector,” Meshioye stated, noting that the theme was couched with a deep reflection on the growth trajectory of the manufacturing sector in Nigeria.

    The MAN President said apart from being a statutory requirement, the 52nd AGM, scheduled to hold from 22 –24 October, 2024, at Lagos Oriental Hotel, presents a veritable platform for deepening Man’s advocacy mandate.

    “We have another opportunity to engage with our members, critical stakeholders and partners to examine our performance in the past year and chart a new part forward,” he said.

    According to him, MAN will continue to partner with governments with a view to  co-creating innovative solution that will free the Nigerian economy from its lackluster performance and place it on the path of productivity, sustainable growth and development.

    Meshioye revealed that the President/CEO of the Africa Finance Corporation (AFC), Mr. Samaila Zubairu, will be Guest Speaker at the 4th edition of the Adeola Odutola Lecture/Presidential Luncheon slated for the third and final day of the AGM on Thursday, October 24.

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    He said Zubairu, who has been at the helm of affairs at AFC for the past six years and has achieved remarkable milestones, will speak to the imperatives of an intentional development of the manufacturing sector.

    There will also be an opening ceremony of a 3-day Made-in-Nigeria Exhibition scheduled for Tuesday, October 22, 2024.

    The exhibition will be a convergence of industry players, government officials, marketers, as well as consumers to experience a new exposure to quality products that are made in Nigeria and ultimately, attract patronage of locally manufactured goods.

    The Director General, Bureau of Public Procurement. Mr. Olusegun Omotola, will declare the exhibition open.

    He will be joined by other dignitaries to draw attention to patronage of made in Nigeria products at the exhibition where over 100 exhibitors will be showcasing their products.

    Meshioye said the exhibition, which will continue the next day, Wednesday, October 23, will have the members only 52nd AGM Private Session holding simultaneously.

    “Additionally, we shall be featuring a value addition presentation by KPMG on embracing sustainable finance; as well as an awareness session on GEF-UNIDO & IEE RECP project,” he stated.

  • Manufacturers reeling from 190 taxes call for urgent relief

    Manufacturers reeling from 190 taxes call for urgent relief

    Manufacturers and business operators in Nigeria are struggling under the burden of excessive and overlapping taxes imposed by various levels of government and agencies. The country’s convoluted tax system has introduced over 190 different taxes, leading to decreased productivity and profitability. In response, there is a growing call for implementing the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) recommendations, which aim to streamline these taxes into just eight categories. Additionally, there is renewed advocacy for the adoption of the Steve Oronsaye Report, which proposes reducing and realigning government agencies to mitigate over-regulation. Assistant Editor CHIKODI OKEREOCHA reports on these pressing issues

    In the second quarter of this year, multiple taxation topped the list of challenges faced by manufacturers and businesses in Nigeria. This is hardly surprising, given that manufacturers and businesses are reportedly burdened with over 190 different taxes imposed by various levels of government and agencies. While over-regulation by government agencies was ranked ninth among manufacturers’ challenges for the quarter, it is said to contribute significantly to the excessive tax burden. This overwhelming tax system is a major factor in reducing productivity, competitiveness and profitability, severely impacting the performance of manufacturers and other private sector operators in Nigeria.

     The release of the second quarter (Q2) 2024 Manufacturers Association of Nigeria (MAN) CEO’s Confidence Index (MCCI) report highlights the severe impact of Nigeria’s challenging business environment, where multiple taxation and over-regulation have pushed the manufacturing sector’s performance into a negative trend. This was evident from the drop in the Aggregate Index Score (AIS) of the MCCI, which fell from 53.5 points in Q1 2024 to 51.9 points in Q2 2024.

    The MCCI, a measure created by MAN to track changes in the confidence of manufacturing CEOs based on government policies and macroeconomic indicators, had shown improvement in the previous quarter. In Q1 2024, the AIS rose by 1.7 points to 53.5, up from 51.8 in Q4 2023, partly due to gains in the value of the Naira and other factors. This marked the first increase since Q3 2022. However, the decline in Q2 2024 underscores, as MAN Director General Segun Ajayi-Kadir notes, “Was proof that these are difficult times for operators in the sector.”

    To put the “difficult times” in perspective, Ajayi-Kadir pointed to a structured questionnaire administered to 400 CEOs of MAN member companies across Nigeria’s six geo-political zones and various sectoral groups. The survey revealed that 90 per cent of respondents felt that over-regulation by the government was stifling manufacturing productivity, while 90.3 per cent identified multiple taxation as a similarly damaging factor in Q2 2024. The impact on the sector was further underscored by a significant drop in production volume, which fell by 11.9 per cent in the quarter, worsening from the 10.1 per cent contraction recorded in the previous quarter. Sales volume also declined by 9.3 per cent, compared to a 7.2 per cent drop in the preceding quarter. Other key manufacturing indicators, including capacity utilisation, investment, employment, and production and distribution costs, also showed unfavourable trends. Concerned about the ongoing challenges, manufacturers are now calling for urgent reforms to address Nigeria’s burdensome tax regime and excessive over-regulation by government agencies. They argue that these issues are major threats to the survival of manufacturing companies and are a significant barrier to improving the competitiveness of businesses in Nigeria.

    How multiple taxes pose existential threat to manufacturing

    Globally, governments rely on revenue from taxes to fund their operations. Taxes are compulsory contributions to state revenue, levied on income, business profits, transactions, and services. As such, tax evasion is punishable by law. In Nigeria, however, the issue of multiple taxation has become a significant problem. Federal, state, and local government agencies, including various ministries, often impose different names for the same tax, despite clear legislation outlining the taxes and levies each tier of government is authorized to collect. Multiple taxation refers to the scenario where the same earnings are taxed more than once by different government authorities.

    This situation results in individuals and businesses being taxed by two or more authorities for the same type of tax. Addressing this problem has been a major focus of advocacy and engagement by the Manufacturers Association of Nigeria (MAN) and other private sector stakeholders with various levels of government. Critics argue that multiple taxation is one of the greatest barriers to business growth and profitability. It is believed to significantly increase the cost of doing business in Nigeria, as companies face additional compliance costs that drive up manufacturing expenses.

    In addition to creating a high-cost operating environment, the burden of multiple taxation significantly diverts manufacturers’ attention from their core business of production. Companies are forced to spend valuable time and resources understanding and adjusting to new tax guidelines, which does not contribute to production or investment. Micro, Small, and Medium Enterprises (MSMEs) are particularly hard hit by the adverse effects of multiple taxation. Many of these businesses, lacking the financial resilience to cope with such burdens, often fail within their first four years, according to the Chartered Institute of Taxation of Nigeria (CITN). CITN has reported that over 75 percent of MSMEs in Nigeria have collapsed due to these tax-related challenges. The institute also highlighted the use of harsh collection methods, such as roadblocks and forceful shop closures, as some of the tactics employed to collect taxes from these businesses.

    However, multiple taxation is not the sole factor contributing to the high-cost operating environment. Other economic pressures, such as rising inflation, also play a significant role. For example, the headline inflation rate increased from 33.20 per cent in Q1 2024 to 34.19 per cent in Q2 2024, while food inflation rose from 40.01 percent to 40.87 per cent during the same period. This escalating inflation has led to higher production costs, prompting manufacturers to raise prices. As a result, there has been a shift in consumer demand from manufactured goods to basic household foodstuffs.

    In addition to persistent inflationary pressures, the manufacturing sector in Nigeria is grappling with a range of economic challenges that are exacerbating production costs. These include exorbitant increases in electricity tariffs, aggressive hikes in interest rates, a high exchange rate, recurrent fuel scarcity, and disruptive industrial actions by the Nigeria Labour Congress (NLC). Collectively, these factors have contributed to a significant rise in production costs, negatively impacting manufacturers’ confidence and performance. Among the taxes that are reportedly subject to multiple levies are Company Income Tax (CIT), stamp duties, petroleum profit tax, capital gains tax, industrial training fund tax, education tax, and VAT, among others.

    In 2022, Alhaji Aliko Dangote, President and Chief Executive of Dangote Group, highlighted another concern: the sharp increases in royalty rates on solid minerals—such as limestone (233.3%), marble (33.3%), laterite (33.3%), shale (20%), gypsum (20%), and clay (100%)—by the Federal Ministry of Mines and Steel Development. Dangote warned that these increases “will undoubtedly have adverse consequences on the performance of industries and the inflow of private sector investment.”

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    Push for implementation of Oyedele tax reform committee’s recommendations

    According to the MCCI report, manufacturers strongly believe that alleviating the burden of over 190 taxes requires adopting and implementing the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC). As Ajayi-Kadir emphasised, “The adoption and effective implementation of the PFPTRC recommendations can ease the tax burden on manufacturers by consolidating the numerous taxes into just eight.”

    In August 2023, President Bola Tinubu inaugurated the PFPTRC, chaired by tax expert Taiwo Oyedele, with the mandate to review and recommend reforms for Nigeria’s fiscal policy and tax system. The Committee was tasked with addressing key areas including Fiscal Governance, Revenue Transformation, and Economic Growth Facilitation, with the reduction of tax multiplicity being a primary focus. The Oyedele-led Committee subsequently submitted 20 recommendations to President Tinubu. These recommendations addressed a broad range of issues such as taxation, job creation, foreign exchange reform, ease of doing business, investment strategies, temporary measures to mitigate the impact of petrol subsidy removal, and overall economic direction.

    Among the 20 recommendations put forward by the PFPTRC is a proposal to address the issue of multiple taxation. The Committee has suggested temporarily suspending taxes that disproportionately impact low-income individuals and small businesses while compensating affected agencies for lost revenue. The Committee has also proposed the consolidation of various taxes and levies into eight main categories: income tax, property tax, Value Added Tax (VAT), customs duties, excise tax, stamp duties, special levies, and harmonized levies. Capitalising on these recommendations, manufacturers are now calling for their adoption and effective implementation. They argue that streamlining the multitude of current taxes into just eight categories would significantly alleviate their tax burden and simplify compliance.

    ‘Oronsaye Report’

    Manufacturers are also focusing on the need to tackle the issue of over-regulation by government agencies. They advocate for the implementation of the recommendations from the Presidential Committee on the Rationalisation and Restructuring of Federal Government Parastatals, Commissions, and Agencies, commonly known as the Oronsaye Report. This report outlines measures for reducing and realigning government agencies and parastatals to streamline operations and reduce bureaucratic inefficiencies.

    In 2011, the Federal Government, under former President Goodluck Jonathan, established the Presidential Committee on Restructuring and Rationalisation of Federal Government Parastatals, Commissions, and Agencies. Chaired by Steve Oronsaye, a former Head of the Nigerian Civil Service, the committee was tasked with streamlining the number of taxes, levies, fees, and administrative charges to help cut Nigeria’s substantial cost of governance. Manufacturers believe that adopting these recommendations is crucial for reducing regulatory burdens and improving the business environment.

    The Oronsaye Committee submitted an extensive 800-page report on April 16, 2012, recommending the abolition and merger of 102 government agencies and parastatals, with some proposed to be self-funding. Despite these recommendations, there has been little progress in implementing them over the past 12 years. Instead of reducing or merging agencies, the government has established additional agencies and continued to issue demand notices from entities with overlapping mandates.

    Successive administrations have struggled with implementing the report. While former Presidents Jonathan and Buhari both issued directives to act on the recommendations, progress has been limited, with only a few selective actions taken. The lack of implementation has been attributed to ongoing controversy and debate. Some Nigerians support the recommendations, believing they are necessary to reduce government waste and enhance efficiency. However, others are concerned that implementing the report could lead to significant job losses, complicating the process of reform.

    Recently, President Tinubu has renewed efforts to implement the Oronsaye Committee Report by issuing a directive to move forward with its recommendations. On February 26, 2024, the Federal Executive Council (FEC) approved the full implementation of the report. Following this, the Secretary to the Government of the Federation (SGF), George Akume, inaugurated an 8-member Committee on March 7 to oversee the implementation process within a 12-week timeframe.

    These actions have sparked renewed optimism among manufacturers and other private sector operators, who are advocating for the government to fully adopt and execute the report’s recommendations. As part of their broader push for relief, manufacturers are also calling on the Federal Government to provide consistent fiscal incentives for exporters of manufactured products. Additionally, they urge the National Environmental Standards and Regulations Enforcement Agency (NESREA) to reduce the Environmental Audit Report and Environmental Management Plan (EAR/EMP) fees, which have seen an over 1000 percent increase, down to 100 per cent.

    The National Environmental Standards and Regulations Enforcement Agency (NESREA), a body under the Federal Ministry of Environment, is responsible for enforcing environmental laws, regulations, and standards to prevent pollution and environmental degradation. According to Section 8(k) of the NESREA Act, the agency is tasked with ensuring that existing industries conduct environmental audits and submit reports every three years.

    NESREA requires Environmental Audit Reports (EAR) from medium and large-scale industrial facilities, telecom operators, and energy facilities. Additionally, small and micro-scale industrial enterprises must prepare and submit an Environmental Management Plan (EMP) for evaluation and certification. The agency is led by Director General/CEO Dr. Innocent Bariate Barikor.

     Recently, NESREA’s decision to increase the fees for EAR and EMP by over 1000 percent has sparked significant concern among manufacturers and private sector operators. This sharp increase has led to widespread calls for a reduction. Manufacturers are also advocating for the retention of the current excise tax of N10 per liter on non-alcoholic beverages, as outlined in the 2022-2026 roadmap, to prevent potential shutdowns in the non-alcoholic beverage industry.

  • Recapitalisation: report predicts bigger loans, advances to manufacturers, others

    Recapitalisation: report predicts bigger loans, advances to manufacturers, others

    Manufacturers and other key sectors of the economy have been tipped to be one of the major beneficiaries of successful recapitalization of the banking sector, through improved access to loans and advances.

    This was disclosed during the launch of the Proshare Bank Strength Index (PBSI) in Lagos.

    Presenting the report, “ Beyond Profit: How a Nigerian company built a culture of credibility”, in Lagos, Managing Editor/Chief Economist, Proshare Nigeria, Teslim Shitta-Bey, said: “Successful recapitalisation places banks in position  to increase loans and advances to the manufacturers and other key sectors of the economy.”

    The PBSI evaluated banks using a pool of financial metrics based on audited financial statements for the Financial Year (FY) 2023, named Access Corp, Zenith Bank, FBNH, ETI, UBA, and GTCO as Tier 1 banks in 2024, reinforcing the Afrinvest-inspired concept of FUGAZE.

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    According to the latest Proshare report, “Tier 1 banks tend to edge out their tier 11 counterparts for big-ticket public and private sector transactions. Hence, the evaluation metrics for bank classification need to be continuously revised, especially when big appears to be beautiful.”

    “Banks are like bulls in a pen; they are stuck behind bars that are difficult to escape. Banking, on the other hand, is free-spirited, agile, and capable of reinterpreting economic reality. Over the last two decades, the financial payment and settlement business has increasingly grown on the back of cloud-based blockchain technology, which may be destined to improve the efficiency of financial transactions and the quality of person-to-person (P2P) and business-to-business (B2B) relationships.”