MAN; Executive Order 003 has not improved patronage of local products
The Manufacturers Association of Nigeria (MAN) has declared that the Executive Order 003, which mandated all government establishments to make Nigerian manufactured goods their first choice in public procurement process has not boosted the patronage of Nigerian manufactured products due to poor implementation.
MAN, in its Manufacturers’ CEOs Confidence Index (MCCI) report on the manufacturing sector for the third Quarter of 2019, stated that 62 per cent of those it interviewed disagreed that patronage of Nigerian manufactured products has improved as a result of the Executive Order 003.
The report stated that only 28 per cent of its respondents agreed that patronage has improved while the remaining 10 per cent were not sure of the status of its implementation.
“Unsurprisingly, formulation of laudable policies has never been an issue for Nigeria but evidence has shown that poor policy implementation has been the challenge in the country.
“Therefore, there is need to properly review the implementation processes of the Executive Order 003 to ensure that Government patronage of goods manufactured in Nigeria improves to boost the performance of the Nigerian manufacturing companies for increased contribution to national output and increased employment opportunities,” the MCCI stated.
The report also noted that the government’s manner of implementing the capital projects does not encourage productivity in the manufacturing sector.
MAN attributed the ineffective implementation of capital projects to delay in budget approvals; the small size of budgetary allocation for capital expenditure and the poor implementation of capital projects.
It enumerated the fallout of poor implementation of capital projects to include poor basic infrastructure such as inefficient port infrastructure, inadequate electricity supply, deplorable road networks and low patronage of domestic products by the government.
The report stated that, “Ideally, government expenditures and procurements are veritable catalysts for improved productivity, growth and employment.
“For instance, capital project that is well funded and properly implemented will translate to improved patronage of manufacturers producing products like cement, iron rods, billets, tiles, nails, iron mesh, pipes, angle irons, doors, window frames and employ local engineers to mention but a few.”
The quarterly report also stated that the country’s operating environment was not conducive to the manufacturing sector.
According to the report, 88 per cent of the CEOs interviewed in the report agreed that multiple/over-regulation by agencies of government depressed productivity in the manufacturing sector.
“Quite often, agencies of the federal, state and local authorities regulate the same manufacturing process resulting to man-hour loses, supervisory duplication and multiple regulatory charges.
“It is expedient that government harmonise the operations, regulatory checklists and mandates agencies of government at all levels to promote friendlier operating environment,” the report said.
Similarly, the report said that 89 percent of its respondents also agreed that multiple taxes and levies depressed production in the manufacturing sector.
The MCCI showed that manufacturers pay over 30 different taxes, levies and fees to agencies of the federal, state and local governments on account of increased revenue target.
“Consequently, there is the need to streamline the observed multiplicity of taxes and ensure that only approved taxes/levies/fees are charged.
“Moreover, government should begin to consider reducing the various tax rates which has been the global order in recent times to encourage investment, particularly into the manufacturing sector.”
However, the MCCI noted that there has been some level of improvement in the nation’s port operation following the on-going government’s reforms. Notwithstanding, poor access, heavy traffic and undue congestion at the ports are still prevalent.
This assertion was corroborated by the response of MAN CEOs interviewed in the report, compared with previous responses in the first and second quarter of this year.
It stated that 87 per cent of the CEOs interviewed agreed that congestion at the ports significantly affects productivity negatively as against 94 percent that was reported in the last quarter.
The slight improvement notwithstanding, port related challenges are still present; particularly delay in clearance of imported raw-materials and machinery that were not locally available by manufacturers.
The delay in port operation was also associated with high and unwarranted demurrage which often times slows down manufacturing operations and increases cost of production in the sector. “There is need to address observed port related challenges: dilapidated infrastructure, inadequate space, weak trade facilitation infrastructure, poor road network and the associated gridlock to enhance competitiveness.”
The report also agreed that the backward integration policy and the import substitution strategy of the government is gaining traction as evidenced by responses from CEOs of manufacturing concerns.
However, 43 percent of respondents still disagreed with the item statement on improved local sourcing. Thirty-eight percent of those interviewed agreed that the level of local sourcing of manufacturing inputs has improved while 19 percent were not sure.
“This showed that there still exists room for improvement. Therefore, government needs to sustain the implementation of the backward integration policy by properly funding relevant institutions, initiating policies that will give priority attention to the development of local raw-materials in commercial quantity, creating friendlier environment for investment on the value-chains of these materials as well as ensure that adequate forex is made available for importation of vital raw materials that are at the moment, not available locally.
Moreover, MAN has called on the Central Bank of Nigeria (CBN) to improve and sustain its current policies aimed at increasing access of loan to the productive sector of the economy in order to stimulate national output.