Nigeria’s Manufacturing Woes Contributing to Foreign Exchange Shortage, Says NESG Report
Nigeria’s weak manufacturing sector is one of the key factors contributing to the shortage of foreign exchange in the country, according to a recent report by the Nigerian Economic Group (NESG).
The report, titled “Nigeria in 2023: Bridging the productivity gap and building economic resilience,” was authored by Dr Wilson Erumebor, the NESG Senior Economist, and published by Foresights Africa.
The report noted that the Nigerian economy has faced significant challenges in the past seven years, with two economic recessions and a shift of economic activity towards agriculture, and a slowdown of the manufacturing sector.
The manufacturing sector’s neglect has resulted in a shortage of foreign exchange, limited job opportunities, and an import bill that surpasses current export earnings.
Furthermore, the report highlighted that the unemployment and underemployment rates in Nigeria reached an all-time high of 56.1 percent in 2020, with 90 percent of workers employed in low-productivity sectors, such as agriculture and non-tradable services.
To address this, the incoming administration must work with stakeholders to develop an agenda for economic and social inclusion, which must include a practical strategy for structurally transforming the economy by moving labor and economic resources from low-productivity to high-productivity sectors.
Dr. Erumebor emphasized the importance of manufacturing, which sits at the middle of the productivity ladder. He suggested that the sector has a much higher productivity level than agriculture and can accommodate a large number of the labor force in the country. Additionally, Nigeria’s projected rising population, mineral resources, and adoption of a single market in Africa, such as the African Continental Free Trade Area (AfCFTA), present an opportunity for the manufacturing industry to thrive.
However, Dr. Erumebor pointed out that inadequate power supply and the burgeoning infrastructure deficit hinder the competitiveness of the manufacturing sector.
He called for the incoming government to address these issues and develop an industrial policy that supports the scale, efficiency, and competitiveness of local firms within the manufacturing sector. Such policies must be integrated with Nigeria’s AfCFTA strategy and support the transition of small-scale firms that are often the drivers of job creation in the country.
Increased Cost of Customs Duty, Forex Crisis Affects Used Vehicles Imports Volume in Nigeria
Used Vehicles auto dealers in Nigeria have expressed concern over the decline of Tokunbo car imports volume in 2022.
According to the dealers, Tokunbo car imports dropped by 47% as a result of the increased cost of customs duty and the forex crisis.
These auto dealers disclosed that the increased cost of duty on used vehicles by Nigerian customs has affected their car sales. They lamented that the import duties have also affected the number of cars they import into the country which has drastically reduced.
It would be recalled that in April 2022, the Nigerian customs announced that it would update the importation of car edition from 2017 to 2021 in compliance with the ECOWAS Common External Tariff (CET) to the 2022-2026 version in which used cars coming into Nigeria are expected to pay a 20% tariff rate and a NAC levy of 15 percent.
The NAC levy, coupled with the Value Added Tax (VAT) of 7.5 percent, results in an almost 50 percent levy that is now paid on the importation of used vehicles in Nigeria.
Speaking on the decline of the importation of used vehicles in Nigeria, regional manager of Auto Auction Mall Oluwafemi Amisu said that the increase in import duties has 100 percent played an important role in the reduction of importation of used cars into Nigeria.
He also attributed the benchmark of car models to an increase in shipping cost leading to an increase in the price of the vehicles.
Shipping companies that formerly used 2,300 vehicle capacity vessels to ship into the country have visibly downsized to 1,000 or 1,500 capacity vessels.
“Majority of transactions made by Nigerians importing vehicles are within the 08-010 model range, which typically cost N400, 000 –N600, 000 to clear. However, since 2014 has been chosen as the benchmark, clearing costs have increased to between N1 million and N1.7 million,” he added.
Also, another challenge that has been attributed to the decline of importation of used vehicles in Nigeria is the Forex crisis which auto dealers lament has affected the purchasing power of customers. They added that people now prefer to buy Nigerian used cars instead of foreign used cars, even so, Nigerian used cars have also become very expensive.
Findings by Investors King reveal that the duty rate is majorly the reason for the drop in the importation of used vehicles, as most of the vehicles coming into Nigeria are below 2013, which mandates that any auto dealer bringing any car lower than that into Nigeria will pay a duty of 2013. Due to this, most of the vehicles are reportedly passing through Cotonou Port.
Ajay Banga Nominated as Sole Candidate for World Bank Presidency
The World Bank Group’s Board of Executive Directors has announced that Ajay Banga, a United States national, is the only nominee for the position of the next president of the bank.
This news follows US President Joe Biden’s nomination of Banga to lead the World Bank in February, citing his suitability for the role at “this critical moment in history.”
Banga, who was born in India and is a naturalized US citizen, is currently serving as vice chairman at General Atlantic and previously worked as the chief executive of Mastercard Inc. If confirmed, he would become the first-ever Indian-American to head either of the two top international financial institutions: the International Monetary Fund and the World Bank.
The World Bank’s Board of Executive Directors will now conduct a formal interview with Banga in Washington D.C., with the expectation of concluding the presidential selection in due course. The current president of the World Bank, David Malpass, is set to step down in June, nearly a year before his term is scheduled to expire, and Banga is expected to replace him.
Banga’s nomination comes at a time of increasing global economic uncertainty, with the COVID-19 pandemic exacerbating pre-existing inequalities and challenging the resilience of many countries’ financial systems. As such, the incoming World Bank president will face significant pressure to navigate the institution through these difficult times, while also addressing concerns around climate action and the role of the World Bank in promoting sustainable development.
While Banga’s nomination as the sole candidate for the position of World Bank president may come as a surprise to some, it also reflects the United States’ historical dominance in the governance of international financial institutions. However, it remains to be seen how Banga will use his position to shape the future direction of the World Bank and address the complex challenges facing the global economy.
Unilever Nigeria to Focus on Higher Growth Opportunities by Exiting Home Care and Skin Cleansing Markets
Unilever Nigeria Plc, one of the leading Fast-Moving Consumer Goods (FMCG) companies, has announced its decision to exit the home care and skin cleansing markets.
The company disclosed that the decision would only affect three of its brands – OMO, Sunlight, and Lux. According to Unilever Nigeria, the move is aimed at accelerating the growth of the organisation and sustaining profitability.
The restructuring of Unilever Nigeria’s business model is in response to the tough business environment in Nigeria, where many organisations and individuals have found it difficult to access cash due to the Naira redesign policy of the Central Bank of Nigeria (CBN).
Unilever Nigeria’s Managing Director, Mr Carl Cruz, noted that the offloading of the home care and skin cleansing portfolios would enable the company to “concentrate on higher growth opportunities.”
Unilever Nigeria has a strong competition in the business categories it is exiting. However, the company’s products are also market leaders in the sector. Mr Cruz added that the company was repurposing its portfolio by gradually exiting two categories, home care and skin cleansing, affecting only three brands (OMO, Sunlight, and Lux).
This would allow Unilever Nigeria to drive the rest of its brand portfolio for growth into the future and strengthen business operations with measures to digitize and simplify processes.
Unilever Nigeria is a truly Nigerian business and the oldest serving manufacturer in the country. The company’s decision to exit the home care and skin cleansing markets is in line with its commitment to adapt to changing market circumstances and reposition itself to better meet the needs of its consumers, shareholders, and employees.
Mr Cruz said, “By making these changes, we will unleash the sustained and profitable growth we need to be here for the next 100 years as well.”
Binance on Chain Balance Stands at $64B Despite Investigation by U.S. Regulators
Huawei Records Decline in Profits For 2022 as US Sanctions, China’s Pandemic Impacts Earnings
Osinbajo Lauds China on Loans Offered to Africans, Repayment System
News3 weeks ago
Npower Pays November, December Stipends; Gives Update on Next Step
Finance2 weeks ago
Npower Release Update on Failed Payment, Send Validation Link to Affected Beneficiaries
Cryptocurrency3 weeks ago
90 Million People Use Cryptocurrency in Nigeria – Report
Technology4 weeks ago
Africa Emerges as The Worst Performing Region in Internet Value
Fintech4 weeks ago
Nigerians Turn to Digital Banks as Traditional Banking Apps Face Challenges
Billionaire Watch3 weeks ago
Aliko Dangote, Johann Rupert Sit Atop Africa’s Forbes Richest Persons List in 2023
Government4 weeks ago
FG Approves N39.6bn For Power Sector to Revamp Electricity
Government3 weeks ago
INEC Considers Postponement of Governorship and State Assembly Elections Amidst Legal Battles