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Electricity tariff increase will render Manufacturing Sector uncompetitive – MAN

 

By Charles Nwaoguji

The Manufacturers Association of Nigeria, MAN, has warned on dire consequences which electricity tariff hike will have on Gross National Product, GNP.

President of MAN, Mansur Ahmed, while addressing the media during the 2020 annual Media Luncheon, in Lagos on Thursday pointed out that electricity is a vital input for manufacturing process to the extent that it constitutes up to 40 per cent of the cost of production.

Mansur, therefore warned that Increasing the tariff of this core input will have drastic negative effect on the Gross National Product (GNP); Gross Domestic Product (GDP), disposable income, consumption, consumer price index, employment, government revenue from corporate taxation etc.

Similar to this is the uneven pricing of this commodity across Distribution Companies, DisCos, which if not corrected, will lead to uneven development in certain parts of Nigeria as the percentage increase in tariff differs, he stated.

According to him, a reduction in electricity tariff for industrial purpose is more ideal but even if it cannot be reduced, it should be not be increased as any increase on the tariff will reinforce the already high cost manufacturing environment and further depress productivity in the sector.

“Our appeal is that Government, being a major stakeholder in the electricity industry, should concentrate on developing processes and polices to attract significant investment to encourage large scale generation and significant improvement in transmission and distribution.

“It is also important for government to ensure adequate and appropriate consultations with stakeholders in the private sector on such decisions with far-reaching implications.”

He also used the occasion to announce the fifth edition of the Nigerian Manufacturing and Equipment Expo (NME) Co-located with the Nigerian Raw Materials Expo scheduled for March 10-12,2020 at Landmark Event Centre, Victoria Island, Lagos.

The theme for this year is: The Fourth Industrial Revolution and the Nigerian Manufacturing Sector.

The gathering is a top notch gathering of international repute where manufacturers, major suppliers of manufacturing equipment and researchers of raw materials meet for strengthened collaboration, technology and logistical solutions and business deals under a secure and trusted platform.

The Association, he informed has prepared some position documents which it believed will be a good source of information for the media.

Mansur, also disclosed that he has been confirmed as the substantive Chairman of the Pan African Manufacturers Association (PAMA), the umbrella body of manufacturers in Africa, which has its main objective of bringing African manufacturers together to jointly engage  Governments of the African continent to create a conducive and enabling environment for local businesses to thrive as we anticipate the takeoff of AfCFTA from July.

Speaking on how the gains of the African Continental Free Trade Area, AfCFTA would be realized, the President said that government must show readiness in addressing the supply side constraints of lack of infrastructure; and  policies and regulations not being too harsh for businesses to operate; rather regulations should be seen as a way of assisting businesses to grow which ultimately enhance competitiveness and boost the economies.

As the Association remains at the forefront for setting the pace for engagement with other African Manufacturers, the Nigerian government must also lead by example in ensuring that policies are industry friendly as this is the only guarantee for a competitive intra-African trade.

“We cannot achieve competitiveness without the provision of infrastructure such as good road networks and electricity, not only within African countries but also across the borders.

There is also the aspect of provision of soft infrastructure – like visa, tariffs, and foreign exchange – that will help ease up the process of carrying out business transactions between countries.   We must address all these issues since the AfCFTA is not just about trade in goods but also trade in services.” he stated.

He posited that the modern industry competitiveness depends to a great extent on provision of adequate and efficient infrastructure and from the availability of power and energy to transport and logistics, the role of infrastructure cannot be overemphasized in trade and economic development on the continent. Transportation alone is vital to enhancing competitiveness in trade, he said adding, “For instance, due to poor infrastructure, it will cost a business owner in Nigeria more to transport goods from Lagos to Kano than it will cost a Chinese business owner to transport the same goods from China to Lagos.”

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