Manufacturers have raised concerns over the acute shortage of essential inputs for production in the sector, warning that output will drop further, and could result in a further rise in the prices of goods
Manufacturers Association of Nigeria (MAN) raised alarm over sugar and resins which are in short supply in the country and the development is severely affecting production, especially in the beverage and confectionery industries. Sugar is used in beverage Industries and for confectioneries like bread. Resins are used for purposes of packaging materials and are critical inputs for practically all the manufacturing sectors.
Sugar production has continued to fall in Nigeria, resulting in a mismatch of supply and demand. In 2020, out of the estimated annual demand of c. 1.7million metric tonnes for sugar, 93 per cent or c. 1.5million metric tonnes were imported.
Resin has also been in short supply resulting in an increase in PVC resin costs by over 30 per cent since March 2021. The shortage is attributed to the COVID-19 pandemic and the devastating ice storm that hit Texas in February of 2021,
The Director-General of MAN, Segun Ajayi-Kadir said the ongoing Russia-Ukraine crisis has worsened the situation for both sugar and resin, stifling the availability of these and other critical inputs for practically all manufacturers in the country at the moment.
“Non-availability and access to sugar and resins pose serious challenges in the beverage and confectionery industries, and MAN is asking the government to intervene very quickly by removing the bottlenecks and ensuring that these critical inputs are available to manufacturers for them to produce in large quantities to increase the volume of production and sales, noted the MAN D-G.
He pointed out that local manufacturers also continue to grapple with the problems of the high cost of logistics, access to foreign exchange, access to raw materials and the impact of excise duty on alcoholic or non-alcoholic beverages which is impacting demand for their products.
In addition, the high inflationary pressure is also constraining the capital expenditure of many manufacturing firms. Inflation in the country currently stands at 19.64 per cent and there is fear it will climb further on the back of rising prices of goods.
“Capacity to expand is being constrained because of the high inflationary situation. These are some of the challenges that are faced by the manufacturers at the moment in the country.
In addition are the cross-border trade taxes and the high cost of logistics accessibility that manufacturers also contend with.
Exports to ECOWAS countries are by road and most especially through the Benin Republic which has now, for a few years been imposing prohibitive transit taxes and levies on transit goods passing through the country.
The MAN D-G said this has made many of the cross-border businesses very unproductive and unprofitable. “It is a major cause of frustration to many cross-border investors. We appeal therefore to the authorities in Nigeria and Benin Republic to resolve whatever issues they have.
These prohibitive fees and levies on transit goods are a clear violation of ECOWAS protocols according to the D-G.
“This does not portend a good omen for our economic integration and the larger issue of the African Continental Free Trade Area because over 80 per cent of trade is by road and if a fellow African country continues to pose this kind of challenge and this kind of impunity to our transit cargo then it gives a great cause for concern.”