Nigerian manufacturers say the initial phase of the ECOWAS Common External Tariff (CET) has been characterised by difficulty in port clearance and unnecessary delays, which attract high demurrage.
They say the situation is already ramping up production costs, while hoping that the Nigeria Customs Service will get accustomed to the process to reduce the delay.
Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), said the tariff regime system has also had a negative impact on the pharmaceutical industry, as finished drugs now attract zero duty while raw and packaging materials go with five to 20 percent tariffs.
“The implication of this tariff arrangement is that locally produced medicines will be more expensive than imported ones. If this is not addressed, it could lead to the closure of pharmaceutical industries and retrenchment of workers. This, by extension, will lead to an upsurge in poverty and crime levels in the country,” Jacobs said, at a second quarter 2015 economic review held in Lagos.
He said from evidence, the second quarter of 2015 was a difficult period for the manufacturing sector, stressing that the recently concluded elections and the time it is taking the new government to settle down to work have slowed down investment in the economy.
“In addition, the policy of the Central Bank of Nigeria (CBN) barring 41 imported items , some of which are input materials for manufacturing, from the foreign exchange will definitely constitute a huge setback to the sector as it is still beset with infrastructure and other challenges,” he said.
“Without doubt, therefore, the future of manufacturing will remain bleak in the nearest future in the present circumstances,” he warned.
He said even if the policy is targeted at domestic production, investors may be interested in knowing how long it will last.
“No investor would expend productive capital to increase the local capacities of the listed products if he is not convinced on the overall consistency of the policy,” he further said.
MAN helmsman recommended that the apex bank should conduct an extensive study to determine the status of domestic capacities of the items identified in the policy, saying that this will help reveal the actual items that need to be excluded from the market.
According to Jacobs, the CBN should collaborate with MAN to identify the items excluded from the market which are material inputs for manufacturers, as this will ensure the continuous existence of factories and their social benefits of employment generation and improvement of well-being of the citizens.
“Government should fast-track the establishment of its Development Bank of Nigeria which was inaugurated earlier and the bank should give priority to the needs of the manufacturing sector,” he added.