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Manufacturing Activities, Macroeconomy Witness Gradual Growth in Q4 2021: MAN

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The Manufacturers Association of Nigeria (MAN) has said that Nigeria’s macroeconomy and manufacturing operating environment were buttressed by the marginal recovery of some key manufacturing indicators allowed a gradual improvement in the fourth quarter (Q4) of 2021.

In its Manufacturers CEOs Confidence Index (MCCI) Q4 report, the President of the association, Mr. Mansur Ahmed clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the fourth quarter performance is better than what was obtained in the 2021 Q3.

The MCCI is an index set up by MAN to measure changes in the quarterly pulsation of manufacturing activities in relation to movement in the macroeconomy and government policies. The Index is considered as MAN’s barometer used to aggregate the views of CEOs of manufacturing companies on changes in the economy.

In the report, Ahmed stated that manufacturers’ resilience, seasonal transactions, and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax-related challenges faced by manufacturers.

The manufacturing sector in Q4 of the year under review, overall recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambiance evidenced by the high points. This he said, cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.

“Manufacturing performance is still below the mark,” Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints. Some of these challenges enumerated by manufacturers are clearly presented in this report.”

The president further advised the government to implement mechanisms such as providing incentives to encourage investments in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also beckoned on the government to specifically provide security to lives and investments in industrial areas.

“In order to improve the performance of the sector, the government needs to intentionally put in place a mechanism that will address these challenges permanently by considering and implementing the following recommendation:

“Further incentivize investment in the development of raw materials locally through the Backward Integration and Resource-based industrialization initiates. Government should call for more investors to key into these initiatives with appropriate and definite incentives.

“For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.

“Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, cameras, etc. for robust monitoring of the areas,” Ahmed stated.

The MAN president in the MCCI report stressed the need to ensure effective allocation of available foreign exchange to productive sectors, especially to the manufacturing sector for the importation of raw materials and vital machines and equipment that are not available locally.

He also buttressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures to improve forex supply to manufacturing concerns.

He said that the Ministry of Science Technology and Innovation should be directed to inaugurate the Secretariat that will implement the strategies for the Executive Order and the Standard Organisation of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (Liquefied Petroleum Gas) Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the government for 12 States in the federation.

Ahmed added, “Return milk and other dairy products to the National list in the fiscal policy guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the dairy production.

“Unify academic curriculum with industrial skill needs and requirements to guarantee the sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with the skills requirements of industries. The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.

“Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change the narrative on the operating environment from being a high cost to low production cost environment.”

On electricity, Ahmed said there is a need to sustain the eligible customer initiative to ensure that more power is supplied to the manufacturing sector.

The Manufacturing Association of Nigeria in its Index Report, further adviced the government to, “Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;

“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector, Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies.

“Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible.”

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Focus More on Port Rehabilitation, Nigerian Ports Authority Tells FG 

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Deep Sea port - Investors King

The Nigerian Ports Authority (NPA) has said the quay walls of the Tin Can Island port require a complete rehabilitation, saying the port is on the verge of collapse.

Managing Director of NPA, Mr. Mohammed Bello-Koko,  while speaking over the weekend stated that the agency had taken a holistic review of the decaying parts of the ports.

“Tin-Can Island Port is practically collapsing. We need to focus our budget on the rehabilitation of those quay walls at the Tin-Can port. We have taken a holistic review of decaying infrastructures at our ports and have decided that it is very important that we rehabilitate Tin-Can and Apapa port,” Bello-Koko stated.

He said the agency had resorted to borrowing in order to sustain the port. It had begun discussions with some lending agencies to lure them into investing in the rehabilitation of ports.

“What we have done is to start talking to lending agencies, even though we don’t intend to lend. We are asking how much money they will invest in the port terminals,” said Bello-Koko, saying the introduction of the Infrastructure Concession Regulatory Commission Act meant that the renewal of concession agreements for terminal operators was no longer done the way it used to be done.

He said the agency had requested for investment companies to invest in the ports.

Bello-Koko also stated that before the agency would also renew the concession agreement of some terminal operators, an agreement must be reached on how to develop the port.

“For us to renew these concession agreements that have expired, about five of them, we need to have categorical commitment from the affected terminal operators on the development of these port terminals. If the terminal operators cannot give us such commitment, then we either give the terminals to someone else or go and borrow money to rehabilitate those ports.”

“However, if we go and borrow money to rehabilitate those ports, then what the terminal operators are paying will have to change. The rates will have to go up. If we don’t do that, these terminal operators will keep managing those places, and the ports will keep collapsing. Because of their financial interest, these terminal operators don’t want us to re-construct the affected port terminals because that will mean stopping them from operating.

“We have had interest from the World Bank, amongst others. Surprisingly, it was the World Bank that actually gave money to the NPA to construct part of Apapa port so many years ago. The World Bank has come again to tell us that if we need funding, they will give it to us.”

He also stated that the agency is watching five terminals to make sure that they are committed to their responsibilities as provided by the port concession agreement.

“Affected terminal operators had been given temporary six-month renewal with conditions to meet before they would have their concession agreement renewed permanently,” Bello-Koko revealed.

“At the point of expiration of any concession agreement, the then Legal Agreement says that the terminal operators can apply for renewal and we will renew. It was after the concession agreement that the ICRC Act came onboard. The ICRC Act requires that there should be a new owner, a new bid and so on and so forth,” he added.

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EFCC Grills Suspended Accountant-General of The Federation, Discovers 17 Properties 

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Ahmed Idris - Investors King

The Economic and Financial Crimes Commission (EFCC) said it has traced not less than properties to the Accountant-General of the Federation, Ahmed Idris. 

On Wednesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the suspension of Idris who is currently being grilled by the EFCC for fraud amounting to N80bn.

The letter titled: ‘Letter of Suspension’, read in part: “Following your recent arrest by EFCC on allegations of diversion of funds and money laundering, I write to convey your suspension from work without pay effective May 18, 2022.”

Investors King can confirm that an anonymous EFCC official revealed that the 17 properties linked to the former AG of the Federation are located in the UK, Dubai, Abuja, Lagos, and Kano. 

However, he said preliminary investigations showed that the nation’s chief accountant allegedly used proxies to buy some of these properties. The commission would therefore need to invite some of the proxies of the accountant-general.

The official added that from all indications, these properties were purchased while Idris was in office and did not declare them before the Code of Conduct Bureau as stipulated by law.

 “About 17 houses in London, Lagos, Kano, Abuja and Dubai have been traced to him. In Abuja, some of the houses are located in serviced estates,” he added.

Investors King reported earlier in the week that EFCC had arrested the suspended Accountant-General, saying “the AGF raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates.”

“The funds were laundered through real estate investments in Kano and Abuja.

“Mr. Idris was arrested after failing to honour invitations by the EFCC to respond to issues connected to the fraudulent acts.

“It further alleged that the funds were laundered through real estate investments in Kano and Abuja,” EFCC added. 

REcall that Ahmed Idris had been under surveillance since last year following allegations that he offered huge sums of money to a family in order to secure the marriage of their 16-year-old daughter.

 

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Nigeria’s Trade Deficit Rises to $765m in Q1 2022  – CBN

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Trade - Investors King

The Central Bank of Nigeria (CBN) has said the value of Nigeria’s international trade deficit rose by 175.13 percent from $152.94m recorded in January 2022 to $420.79m in March 2022. 

The International Trade Summary on the CBN’s website reports that the total value of international trade as of the first quarter (Q1) of 2022 was $28.77bn. Imports stood at $14.77bn while exports accounted for $14.01bn, reflecting a total trade deficit of N764.69m.

In January 2022, export was $4.74bn and import was $4.89, with a trade deficit of $152.94m.

The value of the trade deficit increases further in February 2022 to hit $190.96m, with exports at $4.70bn and imports at $4.89bn.

There was a massive increase recorded in March 2022 as the trade deficit jumped to $420.79m, with exports at $4.57bn and imports at $4.99bn.

In June 2021, Godwin Emfiele, the CBN Governor has said Nigeria would reduce its imports bill by the first quarter of 2022, especially with the Dangote refinery projected to resume operations. This, he said would help reduce the importation of finished petroleum products.

“Of course for petroleum products, by the time the refinery goes into production by the first quarter of next year and the petrochemical plants we would have reduced our importation by about at least close to 35 per cent,” he said. 

However, Nigeria has failed to cut down on its import bill and the Dangote refinery is yet to be completed and operational. In fact, a recent Fitch report estimated that the refinery won’t be operational until 2024, and that is if Aliko Dangote raises the needed $1.1 billion (N900 billion) necessary for its completion.

In its recent report titled ‘Reforms Towards Resolving Foreign Exchange Challenges in Nigeria’, the Nigerian Economic Summit Group (NESG) explained how a rising trade deficit caning impact the nation’s economy.

According to the NESG, Nigeria will continue to rely on foreign loans via Eurobonds and multilateral financial institutions to bolster its foreign reserves as long as the nation’s trade balance continues to decline.

In part, the report stated: “Owing to the deteriorating trade balance position, the country is increasingly exposed to external borrowing through Eurobonds and multilateral loans to shore up its external reserves. In 2021, the trade deficit widened to N1.9tn from N178.3bn in 2020.

“The country had persistently recorded a trade deficit since the fourth quarter of 2019 when the land borders were shut. However, maintaining a trade surplus consistently coupled with adequate inflows of foreign investments will contribute significantly to improving the net flows of forex through the economy – which crashed from $100.8bn in the first three quarters of 2014 to $44.5bn in the corresponding period of 2021.”

“Huge dependence on imports has limited the CBN’s ability to effectively manage the demand for foreign exchange,” it stated. 

NESG further said, “Meanwhile, the massive dependence on imports has constrained the CBN’s ability to manage forex demand by prohibiting certain commodities that could otherwise be produced locally from accessing forex at the official market since 2015.

“The result of this policy action has heightened demand pressures in the parallel market, leading to a wide gap between the official exchange rate (now the I&E Window exchange rate) and the parallel market exchange rate. The parallel market premium averaged N104.7/US$ in 2021, 64.9 per cent higher than the average premium of N63.5/US$ in 2020.”

 

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