MAN canvasses policies to stimulate economy

The Manufacturers Association of Nigeria (MAN) has canvassed a strong focus on price stability and economic growth, with integration of the monetary and fiscal policies to stimulate the economy.

Speaking to The Nation, its President, Dr. Frank Udemba Jacobs, said there was a need for the Federal Government to show strong commitment to resolving the challenges facing the nation by reducing the interest rate on refinancing operations if the manufacturing sector had to stimulate the economy.

He said: "The government must work towards the reduction of Company Income Tax (CIT) to 15 per cent for manufacturers as a way of attracting further investments aimed at pulling the economy out of recession as has been done in other countries with success. It must support the banking sector to maintain the flow of credit, and low interest rate of not more than five per cent".

The MAN chief canvassed the exploitation of the over 35 solid minerals across the country.

He said some of the minerals, such as metals, chemicals, iron and steel could be exploited for motor vehicle and miscellaneous assembling.

He made a case for adequate incentives to attract investors into the sector.

The MAN chief said investment in the petroleum sector was critical, as the nation currently boasts one functional petro-chemical plant, which sadly does not produce all types of petro-chemical raw materials needed in the manufacturing sector.

Pointing out that economic diversification would be difficult without a vibrant manufacturing sector, Jacobs said economic diversification attained by highly industrialised economies such as the United States (U.S), Japan, China and Malaysia was successful principally as a result of deliberate policies by the governments.

He, therefore, urged the government to borrow a leaf from these countries, pointing out that Nigeria could pull out of recession if enough stimulus was given to the manufacturing sector.

Jacobs further advised that all efforts to increase non-oil revenue should be pursued vigorously by removing all obstacles restraining the growth and competitiveness of the sector such as the indiscriminate changes in the Monetary Policy Rate (MPR).

He observed, for instance, that the MPR changed as many as four times between 2014 and July 2016, with distorting effects on the economy.

Others, he said, are the exclusion of 41 items, some of which are essential raw materials from the official Foreign Exchange (forex) market as well as failure to synchronize monetary and fiscal policy actions.

The MAN chief0 also said there was the need to encourage the exportation of manufactured and other non-oil products as a way of boosting foreign exchange earnings, and also conclude the review of the Export Expansion Grant (EEG), which has been going on since 2014.

According to him, this would make the incentive available to exporters as a way of encouraging export and allowing the payment of import duties and Company Income Tax (CIT) with the existing Negotiable Duty Credit Certificate (NDCC).

"There should be development of support infrastructure so as to facilitate the country's industrialisation efforts. It is not advisable to use borrowed funds only to finance infrastructure development. The private sector should be actively involved in infrastructure development.

"Government should, therefore, resuscitate the Public Private Partnership (PPP) programme through the establishment of concession agreements under the Build-Operate-Transfer (BOT) basis in road and rail construction and maintenance," Jacobs added.

He also advised on the need to adjust downward taxes such as corporate income tax, Value Added Tax (VAT), and Personal Income Tax. According to him, it is not advisable to increase CIT, VAT and PAYE as the productive sector is already hit with dwindling investments.

He argued that any further tax increase will crowd out more investments in the sector. Instead, he suggested that current Tax-Gross Domestic Product (GDP) Ratio of 12 per cent, which is below the World Bank benchmark of 18 per cent may be raised by widening the tax net and ensuring that all taxable individuals and entities are covered.