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Nigerian manufacturers worry national debt, tax could hurt economic growth

Published

9 months ago

August 22, 2023

Nigerian Manufacturers Association (MAN) has warned that the country’s debt burden will likely affect economic growth under President Bola Tinubu.

According to the the body’s CEOs’ Confidence Index (MCCI) first quarter 2023 (Q1’23), “The domino effects of escalating public debt on the manufacturing sector are endless”.

Nigeria’s debt profile rose by 410 percent in the last 8 years. In March, Nigeria’s Debt Management Office (DMO) revealed that the country’s total public debt rose to 46.25 trillion naira ($103.1 billion) in 2022.

The rise was from 39.56 trillion naira in the year 2021, as the government ramped up borrowing to fund its budget deficit.

The MAN’s index report further revealed that the “rising domestic debt is highly crowding out private investment in the manufacturing sector by reducing credit availability and forcing hike in lending rates”.

The manufacturers also stressed how the debt situation had affected the availability of foreign currencies for their industry to stimulate production and national economy.

“External debts are mostly serviced in foreign currencies, hence high demand for foreign currencies further depreciates the naira and makes importation of non-locally produced critical inputs highly expensive for manufacturers.

“Moreover, higher debt servicing is consuming greater volume of forex and worsening the forex scarcity that has plagued the manufacturing sector for many years. Higher debt repayment requires increased revenue.

“The Nigerian government has continued to breed a harsh business environment by its indiscriminate imposition of high and multiple taxes on manufacturers all in a bid to generate revenue”.

Nigeria’s public finance is currently affected by dwindling oil prices and industrial-scale crude oil theft and what used to be the high amount expended on fuel subsidies.

With fuel subsidy out of the equation from the first day of his administration, it is yet to be seen how President Tinubu will better the country’s economic lot in the shortest space of time.

A likely option is the tax system but there are already existing fears around taxation in the country. So much that MAN stressed that “contrary to the popular parlance in the government quarters that Nigeria has revenue problem, the country’s debt crisis is not a result of inadequate revenue and it is anti-growth to view manufacturing taxes as the last resort for curbing the debt problem”.

Related Topics:Featured Manufacturer Nigeria

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Nigeria’s inflation hits 28-year high of 33.69% in April

Published

12 hours ago

May 16, 2024

Ifeoluwa Dada

Nigeria’s consumer inflation reached a 28-year high of 33.69% in April, up from 33.20% in March, according to statistics agency figures released on Wednesday.

President Bola Tinubu’s administration has slashed petrol and energy subsidies and devalued the local naira currency twice.

To manage pricing pressures, the central bank has hiked interest rates twice this year, including the highest hike in almost 17 years. The central bank governor has stated that rates will remain high for as long as necessary to reduce inflation. The bank will host another rate-setting meeting next week.

When compared to the previous year, the inflation rate in April 2024 was 11.47 percentage points more than in April 2023, when it stood at 22.22 percent. This implies that the headline inflation rate has increased dramatically during the last year.

According to the National Bureau of Statistics, food and nonalcoholic beverages remained the largest contributor to inflation in April. Food inflation, which accounts for most of the inflation basket, rose to 40.53% yearly from 40.01% in March.

Price pressures have left millions of Nigerians facing the biggest cost-of-living crisis in decades, as they fight to satisfy their most basic necessities.

Tinubu has offered a 35% salary increase for state personnel to alleviate pressure on government workers. To assist disadvantaged households, his government has resumed a direct cash transfer program and provided at least 42,000 tons of grains such as corn and millet.

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Uganda discusses power line to South Sudan with China’s Sinohydro

Published

1 day ago

May 15, 2024

Ifeoluwa Dada

According to the president’s office, Uganda is in negotiations with Sinohydro Corporation Limited of China to build a $180 million power transmission line that would enable Uganda to export electricity to South Sudan, which is severely short on energy.

Ugandan President Yoweri Museveni received a group led by Vice President of Sinohydro Corporation Yang Yi Xin on Monday as part of the negotiations, according to a late-morning statement from Museveni’s office.

The project, according to the statement, will entail building a new substation and expanding two existing ones in addition to building a 138-kilometre high-voltage transmission line to provide power to South Sudan.

“We are very much willing to help develop this project with the required finance if needed,” Xin was quoted as telling the president.

The statement stated that Museveni endorsed Sinohydro’s proposal to carry out the project. Uganda and South Sudan inked a power sales deal in June of last year, enabling Uganda to sell electricity to South Sudan.

To enable Uganda to export electricity to South Sudan, the two nations inked a power sales deal in June of last year. The Chinese firm is completing a $1.5 billion, 600-megawatt hydropower project on the River Nile in Northern Uganda that is meant to be the source for electricity exports to South Sudan.