Dr. Frank Jacobs is the President of the Manufacturers Association of Nigeria. In this interview with NGOZI AMUCHE, he says the Federal Government should urgently revive the economy; revitalise the industrial sector; grow Micro Small and Medium Enterprises and create employment for citizens. Excerpts:
Taking into consideration the state of the economy, what are the major challenges facing the manufacturing sector?
Well, apart from other challenges we used to have, scarcity of foreign exchange is our major challenge. It is difficult for our members to get foreign exchange to buy raw materials for production of goods.
Another issue is that the cost of production is very high, for instance, our members have to generate their own electricity to be able to run their business effectively. Again the price of gas is high, going by the current exchange rate.
We believe that the lack of access to foreign exchange by the real sector should be addressed immediately. We are aware of, and commend the government for the various steps taken to resolve this issue, including the standing directive of the Central Bank of Nigeria to banks to channel minimum 60 per cent of available forex to manufacturers.
How easy or difficult has it been for manufacturers to procure raw materials, because it is a well-known fact that virtually all raw materials used in this country are imported?
When you don’t have enough foreign exchange, you won’t be able to buy raw materials for production. It is a major challenge. We have also appealed to the government to review the list of 41 items banned by the CBN from accessing foreign exchange in the interbank forex market, so as to remove raw materials components that cannot be sourced locally from the banned items.
Stakeholders are afraid that the forex crisis facing manufacturers will definitely affect the qualities of products being churned out to the public. What is your take on this?
We cannot compromise quality. I have also told my members to desist from reducing quantity and quality of their goods as a result o f the scarcity of foreign exchange; because such move would further impact negatively on the economy. It is not in the interest of any manufacturer to reduce the quantity of his or her product; such practice would surely negatively affect customers’ confidence.
The moment you do that, the buyers, who already knew the size of the product, would react by boycotting your products. You know the implication of this. Once a consumer is lost, it is usually expensive to regain his or her confidence. On the issue of quality, it is difficult for any manufacturer, who wants to remain in business to reduce the quality of his/her products.
Although some manufacturers could be tempted to do so, in order to make some profit, but such ‘smart’ move has its consequences. The world is a global market, where competition is high and productivity and sales income are dependent on prices and quality of products.
What is the outcome of the meeting you held with the Vice-President in Abuja early this week?
The meeting with the Vice President was encouraging and engaging, because the government made us feel we are part of the economic team. We deliberated on how to move the economy forward and I am optimistic that something good will come out of the meeting, because what we are doing at this point in time is to look for solution or a way out of the present economic logjam.
What is your view on the 2017 Appropriation Bill? Do you agree with the government’s claim that it could revive the economy?
No, my take is that the Federal Government should allocate 45 per cent of the 2017 Appropriation Bill to the development of capital infrastructure, as that will accelerate the nation’s economic recovery. This is because such allocation would create wealth and redistribute income.
For instance, allocating 45 per cent is possible, if government across boards would cut down their budgetary votes on governance. The paltry 30 per cent previously allocated would not elevate the country’s economy from the current position.
Sustaining this proportion over the years on infrastructural development would reposition the economy and set it on the path of prosperity. Allocating it to key infrastructure such as renewable energy, modern railway network across the country and information technology incubators would facilitate the development of the society.
Apart from that, there is the need for the National Assembly to give the 2017 budget an accelerated passage for a quick assent by the President. The Executive must streamline the bureaucracy for timely release of funds to appropriate Ministries, Departments,and Agencies of government.
We must avoid the mistakes of the past, where budgets were not passed on time and when they were eventually passed, capital allocations were not disbursed, even at the end of the second quarter of the financial year.
