Subsidy removal: LCCI, MAN, CPPE task FG to derisk impact on real sector
Manufacturers and industrialists have urged the Federal Government to take urgent steps to address their concerns and derisk the impact of fuel subsidy removal on the real sector.
They spoke in an interview with the journalists on Tuesday in Lagos.
Founder, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said government should begin to ensure liquidity in the foreign exchange market.
This, he said, would guarantee manufacturers access to foreign exchange for the procurement of raw materials and machineries for industry.
Yusuf also emphasised the need for rapid investment in core industries to support backward integration aspirations of government.
Such core industries, he said included the iron and steel, petrochemicals, aluminum smelter, pulp and paper and refineries.
He said that government must begin scaling up investment in infrastructure through the injection of more funds and the attraction of private capital into the infrastructure space.
“This would reduce production cost and boost productivity in manufacturing.
“There must also be the creation of more industrial parks across the country and improvement in the facilities in existing ones.
“Nigeria needs to strengthen current development finance to support the real sector with appropriate financing – single digit facility with a minimum of five years tenure,” he said.
President, Lagos Chamber of Commerce and Industry (LCCI),Dr. Micheal Olawale-Cole, commended the Federal Government on fuel subsidy removal.
He said industry regulators and operators were already implementing the subsidy removal.
He said industry regulators and operators were already implementing the subsidy removal.
Olawale-Cole said its removal would greatly impact the government’s coffers, improve accountability in the sector, impact government capacity to finance infrastructural development and to grow the economy.
He said that the decision, if followed through appropriately, would result in improved investments, especially along its value chain, promote healthy competition and even ensure product availability.
He appealed to Nigerians to express understanding and support the government in the proper implementation of this much-desired policy.
The LCCI President urged government to express commitment to the welfare of the masses, especially the most vulnerable groups and industries.
This, he said, could come in the form of palliative provisions and interventions for critical industries.
“The government should also hasten to rehabilitate existing refineries – get them into proper functional state.
“It can thereafter completely sell them in an open, competitive bidding process or partly sell them, using the NLNG model.
“Meanwhile, I urge industry regulators to ensure a seamless transition, particularly in terms of distribution channels and speedily address any violations, like tampering with meters that could thwart the efficient implementation of the policy,” he said.
Director General, Manufacturers Association of Nigeria (MAN),Dr. Segun Ajayi-Kadir, said issues of multiple and often times punitive taxation and conflicting and contradictory fiscal and monetary policy measures should be addressed.
Ajayi-Kadir stated that infrastructure to drive the real sector remained inadequate and stressed that ongoing efforts of government on infrastructure development has to be intensified.
He added that the Central Bank of Nigeria (CBN) should be prevailed upon to give priority to the allocations of foreign exchange, particularly to manufacturers to import raw materials, spares and machinery that were not locally available.
He called for the revisiting of the Finance Bill 2022 to ensure it included the critical inputs of the organised private sector.
He said it should also include the jettisoning of the highly objectionable removal of the 10 per cent investment allowance on acquisition of plants and machinery (in the Company Income Tax Act) in particular.
“Government should also announce a special policy initiative to address the revival of closed and distressed industries, particularly in the north-east where 60 per cent of our member companies have closed,” he said.
