CPPE: Nigeria's executive order huge gain for manufacturers

Nigeria's manufacturing sector is facing challenges despite the recent executive order signed by President Bola Tinubu, according to the Centre for the Promotion of Private Enterprises. In a recent interview with CNBC Africa, Muda Yusuf, Director at the Centre, discussed the impact of the executive order on manufacturers in the country. While the order was seen as a positive step, Yusuf highlighted that there are still numerous challenges that need to be addressed to support the growth of the sector. One of the main concerns raised by the Centre is the collection of Value Added Tax (VAT) from the informal sector, which could negatively impact small businesses. Yusuf emphasized the need for the government to consider the implications of imposing taxes on businesses that are already struggling to survive. Despite the challenges, Yusuf acknowledged that the suspension of certain taxes by the new administration was a welcome relief for manufacturers. However, he pointed out that more needs to be done to address issues such as high interest rates, import duties on raw materials, and the lack of effective implementation of policies to promote locally made products. The growth of Nigeria's manufacturing sector has also been affected by factors such as foreign exchange depreciation and structural challenges. In the first quarter of this year, the sector saw a slowdown in growth, with a decrease from 2.8% in the previous quarter to 1.6%. To revitalize the sector, Yusuf suggested interventions such as concessionary financing through development finance institutions, further concessions on import duties for raw materials that are not locally available, and the effective implementation of policies to promote locally made products. He also highlighted the importance of addressing challenges at the ports to ease the pressure on manufacturers. Small businesses in the sector are facing difficulties in passing on costs to customers due to resistance from consumers amid higher inflation. Many small businesses are struggling to maintain their profit margins and are selling products just to generate liquidity. Yusuf emphasized the need to address inflation at a macro level to support businesses in the sector and boost economic growth overall.