Manufacturers Brace Up For 4% Growth In Capacity Utilisation

By OLAJIDE FABAMISE, Lagos
The Manufacturers Association of Nigeria (MAN) has said that Capacity utilisation in the manufacturing sector is expected to grow by four per cent from the 44.8 per cent witnessed in the first half of last year.
Disclosing this in an interview with LEADERSHIP Sunday in Lagos, Director in charge of Economics and Statistics Department of MAN, Mr. Ambrose Oruche, said they were still computing figures for the second half of last year, which will be ready soon.
Oruche explained that with the budget presented by the federal government and the economic outlook in the country presently, the capacity utilisation is expected to improve.
He said, “Looking at the budget for the year and the outlook of the economy, we are expecting capacity utilisation to go up to 48/49 percent, all things being equal.
“Last year, we just had the first half report. We are about to conclude second half because second half just finished in December. We just started the survey for second half. The first half capacity utilisation is about 44.8 per cent”.
He also commended government decision to place a ban of some imported items, which he said would have positive effect on the manufacturing sector if properly implemented.
His words: “The manufacturing sector has the capacity to meet the demand as a result of the policy. When we operate below 45-44 per cent capacity it means that there is 56-55 per cent capacity that is lying idle.
“All that is needed is to deploy the idle capacity, then do expansion to increase the capacity. So, the capacity is there but the issue is is Nigerians patronising made in Nigeria products? If the restriction is properly implemented, definitely it is bound to have a positive effect on companies operating within that sector”.
He, however, expressed worry about the ability of government agencies to effectively enforce the import restriction policy which, he noted, will make none-sense of the intention of the policy.
He continued: “Another major thing about import restriction is the effectiveness of the implementation because when you restrict some products and you get to the super-market and you find them there, it shows that actually it is not working.
“The authorities in charge, the Customs and all the other relevant agencies must be on their feet and make sure that the policy works because if the policy does not work it will still not have effect”.
Also, speaking with LEADERSHIP Sunday in a phone conversation, the President of MAN, Dr. Frank Jacob, commended the federal government for the recent reduction of the import duties on 115 items.
The Minister of Finance, Mrs. Kemi Adeosun, had announced that the federal government had reduced import duties on 115 items, most of which were raw materials for the industries.
Jacob said, “We can say the step is a welcome idea. It shows that that government listened to us, manufacturers and industrialists, because the cost of raw materials is one of the issues crippling the key non-oil sector.
“For instance, the reduction of duties on alcohol for medical pharmaceutical purposes and other raw materials needed by local manufacturers in this field will reduce the cost of production. The same also applies to ready wines, beverages and vinegar; the increase in duty from 20 per cent to 60 per cent may serve as a deterrent to importation and boost local production.
“For 2016, it has been a year of economic recession for two consecutive quarters, with no real policy to stimulate investment, but we are optimistic that 2017 will be better,” Jacobs said. The MAN president, nonetheless, emphasised that achievable monetary policies should complement fiscal policies so as to achieve the desired results”.
LEADERSHIP Sunday recalls that the CBN had rolled out a new policy on foreign exchange aimed at easing access to foreign currencies for personal, business, travel, educational and medical purposes, among others.
The CBN later provided $370.9m to 23 banks to meet the visible and invisible requests of customers, just as it further directed all banks in the country to open foreign exchange retail outlets at major airports as soon as logistics allowed them.
The CBN also eliminated stiff conditions in applying for Basic Travel Allowances (BTA) in banks.
The apex bank said, “We have tried as much as possible to simplify the access of this particular fund. We all know that the issue of tax clearance has been an issue because not many people can produce their tax clearance and for those who can, some can also easily produce fake tax clearance and the process of verifying this is very difficult.
“So the central bank has waved the issue of tax clearance provision in accessing these funds and all you need to do is basically your journey must originate from Nigeria, travelling out. You cannot leave overseas and buy BTA to travel. You must have a valid ticket to travel with and as a matter of fact you must have a bank account and BVN to recognise you as a bank account holder.”