The Manufacturers Association of Nigeria (MAN) has described the January 2021 inflation rate of 16.47 per cent as a threat to the envisaged manufacturing and industrial sectors’ recovery and growth.
Mr. Segun Ajayi-Kadir, Director-General, MAN, made the assertion on Tuesday in Lagos.
Recall that the inflation rate for January, according to the National Bureau of Statistics (NBS), climbed to 16.47 per cent from 15.75 per cent in December 2020, translating to a 0. 71 per cent increase.
Ajayi-Kadir said that the increase in food inflation rate at 20.57 per cent, from 19.56 per cent in December 2020, would compound the already high cost of living and the disposable income of the average Nigerian.
The NBS, in its report, had said that the composite food index rose by 20.57 per cent in January compared to 19.56 per cent in December.
This rise was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish, and oils and fats.
Ajayi-Kadir noted that the resulting weak consumer spending would worsen the high stock of unplanned inventory that the manufacturing sector was already confronted with.
“The manufacturing sector has been struggling, particularly in the past four quarters, from 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 has compounded the downturn in the sector in terms of the envisaged recovery.
“The concerted efforts of government to recover the economy will have to address the aforementioned challenges,” he said.
The MAN DG advised the government to intensify efforts at stabilising the consumer price level through growth in agricultural output and diversification of the Nigerian economy in order to guarantee stable prices in both agricultural and manufactured goods.
Ajayi-Kadir also pushed for the resuscitation of moribund industries in the country to boost output, thereby reducing prices.
“Government should also partner with the Manufacturers Association of Nigeria to accelerate the success in the resource-based industrialisation initiative of the association.
“Government should assist manufacturing productivity with credit at competitive price.
“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,” he said.