Manufacturers Association of Nigeria (MAN), at the weekend, raised concerns over the rising inflation in the country and called on the Federal Government to take bold steps to check the trend, insisting that it arose due to failure of the monetary authorities to address the shortcomings.
In a statement signed and issued by its Director General, Segun Ajayi-Kadir and made available to The Trumpet, it maintained that in addition to the familiar triggers of inflation in Nigeria, issues of seasonality, insecurity, food shortages, shortfall in supply of raw materials for production of food products, fertilisers and other items not available locally could cause inflation.
It said the top three drivers of inflation in the period under review were fuel scarcity, rising insecurity, scarcity of foreign exchange and constant depreciation of the naira.
“Nigeria remains a highly import-dependent economy and as such, the exchange rate passes through effect and continues to worsen inflation with the domestic currency depreciating by over 22 per cent in the last 12 months.
“At present, the exchange rate premium has further widened by N194 with the naira trading at about N610 to $1 at the parallel market and at the official market.
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“Inflation rate has assumed an upward swing, which of course signals worsening economic times ahead. For instance, a cursory look at the report revealed that the 18.6 per cent portends a gradual journey towards the 18.72 per cent peak inflation recorded in January 2017.
“Obviously, this is an overwhelming acceleration of inflation rate that should be halted urgently, especially given the fact that socio-economic activities that trigger inflation are imminent,” the statement reads.
The MAN maintained that the implication of the high inflation rate for the manufacturing sector include rising cost of production inputs, which will affect capacity utilisation, inventory and profitability of manufacturing firms, higher Monetary Policy Rate (MPR) and lending interest rates.
These would further restrict access to credit and increase the cost of borrowing for manufacturers, especially those in the Small and Medium Industry (SMI) cadre and upward swing in the value shares for manufacturing concerns on the Nigerian Stock Exchange.
“It will also have different implications on the demand for manufactured products leading to poor sales and turnover, lower competitiveness as the high inflation rate further mounts pressure on the already high cost operating environment, which may hinder the prospect of beneficial trade in the region and the African continent.
“MAN strongly believes that high inflation is a major indication of macro-economic inadequacies and failure to take steps to address the contributory factors will further limit economic growth and increase unemployment in the country,” the statement added.
MAN, therefore, urged the Federal Government to resolve all foreign exchange challenges confronting the productive sector by making prevailing on the Central Bank of Nigeria (CBN) to change its foreign exchange regime that contradicts one of the goals of the National Development Plan (NDP), which seeks to attain quick convergence of exchange rate.
