Following the National Bureau of Statistics (NBS)’s inflation data released on Tuesday, showing that headline inflation moved from 15.75 per cent to 16.47 per cent, the Manufacturers Association of Nigeria (MAN) has declared that the latest indicator is a direct threat to the envisaged recovery and the growth of the industrial sector. In addition, MAN emphasised that the rise in food inflation would also compound the high cost of living and disposable income of the average Nigerian.
Director-General of MAN, Segun Ajayi-Kadir, while reacting to the figures in an interview with New Telegraph, in Lagos, said that in the past four quarters, the country’s manufacturing sector had been facing negative trajectories against growth and development. Ajayi-Kadir said: “As you are aware, the manufacturing sector has been struggling, particularly in the past four quarters with the combined effect of COVID-19, deteriorating infrastructure, high regulatory compliance cost and tax obligations.
“So rising and high inflation, perennially high interest rates and scarce/high rate of forex have compounded the downturn in the sector. “In particular and in direct response to your question, the increase in the headline inflation from 15.75 per cent to 16.47 per cent is a threat to the envisaged recovery and the growth of the industrial sector.
There is also the rise in food inflation, which will compound the high cost of living and the disposable income of the average Nigerian.” According to him, the resulting weak consumer spending will worsen the high stock of unplanned inventory that the manufacturing sector is confronted with. He said: “You will recall that our economy slipped into its second recession in four years in the third quarter of 2020, after recording two contractions in a row.
So the concerted efforts of government to recover the economy will have to address the aforementioned challenges. “In doing this, the private sector representative like the Manufacturers Association of Nigeria is duly armed with economic recovery recommendations that relevant government authorities can implement to speedily revive the economy from its current state.
“For instance, government should intensify efforts at stabilising the consumer price level through growth in agricultural output and diversification of the Nigerian economy in other to guarantee stable prices in both agricultural and manufactured goods. “Also, there are quite a number of moribund industries in the country that should be resuscitated to boost output and thereby reduce prices. “Government should also part-ner with the Manufacturers Association of Nigeria to accelerate the success in the resource based Industrialisation initiative of the association.”
Ajayi-Kadir, however, pointed out that it was evident that there is a strong relationship between manufacturing sector growth and inflation rate, just like exchange and interest rates. He said for this moment and in the immediate future, government should, therefore, assist manufacturing productivity with credit at competitive price, adding that this could be in the form of concessions and enhancing existing special credit windows or creating additional ones for this important sector of Nigerian economy. Also, he noted that MAN wanted deliberate policy to stimulate domestic production, thereby increasing domestic as well as foreign demands for goods.
NBS had stated in its latest headline inflation data that the consumer price index (CPI), which measures inflation, continued its upward trend in January, hitting 16.47 per cent (yearon- year) against December 2020 figure of 15.75 per cent. Consequently, the increase represents 0.71 per cent points higher than the rate recorded in December 2020 (15.75 per cent). Besides, inflation figure has been on consistent rise in the past 15 months. Prices of foodstuff, services and other essential commodities have been on steady rise since last year. January figure reflected increases in all divisions that yielded the headline index. On food component index, rise in prices were recorded in bread and cereals, potatoes, yam and other tubers. In addition, meat, fruits, vegetable, fish and oils and fats recorded increase.