Manufacturing output drops to N165.7b
AN early presentation of the nation’s proposed spending for the year 2012 is likely with Finance and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, giving a November deadline. She said Nigeria’s Economic Task Team members were working hard to deliver a workable and implementable budget for Nigeria between the last week of October and first week of November, this year.
She hinted that some ministers have requested for virement from the National Assembly to transfer funds allocated to non-existing projects to some ongoing projects in the 2011 budget.
And in the manufacturing sector, its contribution to the economy in 2010 was below that of 2009. It declined from N183.8 billion in the first half of 2009 to N165.7 billion in the same period last year.
Also, investment profile from the sector in the first half of 2010 had a sharp decline from N1,280.592 billion in 2009 to N360.232 billion in the corresponding period of 2010.
The Director-General of the Manufacturers Association of Nigeria (MAN), Mr. Jide Mike, made the disclosure in the association’s 2010 yearly report at the weekend in Lagos. He said the contribution of the manufacturing sector to the country’s Gross Domestic Product (GDP) was 4.19 per cent in 2010 compared to 4.21 per cent in 2009.
At a briefing during the weekend to announce the re-launch of the President Goodluck Jonathan administration’s “Transparency in Action” project in the publication of Federation Accounts Allocations to the three tiers of government in the media and website of the Federal Ministry of Finance, Okonjo-Iweala said: “The 2011 budget has a lot of problems. Some ministers have discovered that some projects listed in their budget plans cannot be traced. We are therefore doing a virement to move funds from those non-existing projects to some projects that exist but for which adequate funding was not made.
“That is why we are working hard to have an implementable budget next year. Already, we have an implementation tracking team in the Federal Ministry of Finance and the National Planning Commission (NPC) to monitor budget implementation to ensure enhanced performance.”
A glean through the published allocation from January 2010 to July 2011 showed that last year alone, the three tiers of government shared a total federation revenue of N5.753 trillion comprising: Federal Government, N2.416 trillion; states, N2.085 trillion, and local councils, N1.25 trillion.
“The 2012 budget should be ready by October or the beginning of November this year. This week, we are going to have interaction with our colleagues (ministers) and the leadership of the National Assembly. We are working at a very good speed to ensure that we have an implementable budget next year. We would try to persuade all stakeholders that the President wants to change things. This is a new era of transparency,” she said.
According to the MAN’s boss, the average manufacturing capacity utilisation decreased from 47 per cent in 2009 to 45 per cent in 2010.
Mike said: “Employment figure in the first half of 2010 recorded a decrease from 998,086 in 2009 to 966,395 in the same corresponding period of 2010.
“Business’ unplanned inventory increased from N5.15 billion in first half of 2009 to N11.4 billion in the same period of 2010. The same year also witnessed the introduction of Cargo Tracking Note (CTN) by the Nigerian Ports Authority (NPA) using security platform. The effect of this policy on manufacturers was an increase in the cost of shipment to Nigeria and consequently the cost of doing business in the country.”
To reposition the sector as the country’s engine of growth and as a transformation agent, Mike urged the government to give infrastructure overhaul prominence.
Mike called for acceleration in the ongoing power sector reform and encouragement of investment in the Independent Power Project (IPP).
“In order to enhance the development of Small and Medium Enterprises (SMEs), the Central Bank should encourage banks to play more active part in the scheme. The link between the oil and gas industry and the rest of the economy should be encouraged.
“Appropriate incentives should be created to encourage development of linkages between SMEs and large firms. Tax policy should be harmonised and streamlined to curtail the menace of multiple taxation. The CTN policy should be abrogated while activities of ports operations should be streamlined as a way of reducing ports congestions.
“Linkages between agricultural sector, especially agro-allied industries and manufacturing, should be streamlined. Appropriate incentives should be given for backward integration. Core industries such as iron and steel should be accelerated. The petro- chemical industries should be fully developed to provide raw materials for downstream industries”.
Giving report on business activities in the Lagos area, Mike said factory visits’ reports revealed a general lull in business, sharp drop in sales, reduction in working capital, high inventory of unsold stock, and reduction in average capacity utilisation to an all-time low of 27 per cent.
He added that there was also about 45 per cent increase in raw material procurement cost, increase in interest rate from 12 per cent to 26 per cent for normal loans and eight per cent to 19 per cent for dollar facilities.
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