The Manufacturers Association of Nigeria (MAN) has put out an open threat that a shutdown of manufacturing activities in the country would be very imminent if nothing is actually done to address the soaring cost of energy in form of Diesel which has been bedevilling the sector.
According to a statement by Segun Ajayi-Kadiri who is the Director-General of the association, he reiterated that over the years, the manufacturing sector has been battered by some of the numerous challenges which have reduced the number of working industries in Nigeria and converted most of the industrial hubs in many parts of the country to warehouses of imported goods and event centres.
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MAN also asked for a policy that would urgently allow companies and airlines to import diesel and aviation fuel respectively from the Republic of Niger and Chad.
MAN said by immediately opening up border posts in that axis for this purpose, the effect of high diesel and aviation fuel prices would be cushioned on the economy.
The association also called for help in saving the remaining manufacturing companies from closing down as a result of challenges arising from the inadequate electricity supply, inaccessible foreign exchange, and a rise in the cost of diesel.
Ajayi-Kadri said there were uncertainties and fear of survival of firms, and expressed fear of a force majeure over increasing diesel prices by 200 per cent.
Findings by Africa Today News, New York have shown that diesel, which was sold at ₦266/litre as of October 2021, has recently increased to above ₦800/litre, which is above 200 per cent. There are fears that the price could climb to ₦1500 if nothing is done to resolve the crisis, especially in terms of Russia’s invasion of Ukraine.
“Four obvious questions that readily come to mind that are seriously begging for answers are- What can we do as a nation to strengthen our economic absorbers from external shocks? Should manufacturing companies that are already battered with multiple taxes, poor access to foreign exchange and now over 200 per cent increase in the price of diesel be advised to shut down operations? Should we fold our arms and allow the economy to slip into the valley of recession again? Is the nation well equipped to manage the resulting explosive inflation and unemployment rates?
“More worrisome is the deafening silence from the public sector as regards the plight of manufacturers,” he said.
The association identified challenges such as a high operating cost environment largely caused by inadequate electricity supply, the high cost of alternative sources, excessive regulation and taxation, as well the inadequate supply of foreign exchange for the importation of raw materials, spare parts, and machinery that were not locally available.