According to the Manufacturers Association of Nigeria (MAN), the manufacturing sector has been hardest hit by Nigeria’s debt crisis, which has seen the country’s debt profile rise by 410 percent over the last eight years.
The N77 trillion that President Bola Tinubu‘s administration inherited is likely to limit the achievements of the government if urgent and crucial steps are not taken, according to the MAN CEOs’ Confidence Index (MCCI) first quarter (Q1’23) report, which was made available on Sunday.
The report stated: “The cascading effects of rising public debt on the manufacturing sector are endless.
“To start with, rising domestic debt is highly crowding out private investment in the manufacturing sector by reducing credit availability and forcing hikes in lending rates.
“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 a 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 through its indiscriminate imposition of high and multiple taxes on manufacturers, all in a bid to generate revenue.
“Huge public debt led to low foreign investment and foreign capital inflow, which worsened the forex scarcity that has remained a bone in the throat of manufacturers.”
MAN added: “Contrary to popular belief in government circles that Nigeria has a revenue problem, the nation’s debt crisis is not the result of a lack of revenue, and it is anti-growth to view manufacturing taxes as the last resort for addressing the debt problem.
The manufacturing sector, which has always been at the receiving end, has not felt any significant impact of debt finance on the numerous challenges that have bedevilled its performance in many years. ” Infrastructure decadence, forex scarcity, credit crunch, and naira depreciation have become bones in the throats of MAN members despite the humongous increase of over 410% in the country’s debt profile in the last eight years.
“Amidst multiple taxes, Nigeria’s real problem is not revenue generation or collection but the siphonage of collected revenue so that it does not reflect in the records.”
The report states that the “Manufacturers Association of Nigeria is of the opinion that debt worth N77 trillion is an enormous burden to inherit and will probably limit the accomplishments of the new administration.”
The Manufacturers Association of Nigeria suggested implementing a number of things along the way, including the following:
“Increase the tax base by encompassing more business owners in the informal sector through improved data collection.
“Strictly implement the Federal Inland Revenue Service’s (FIRS) Voluntary Assets and Income Declaration Scheme (VAIDS).
In order to stop the leakage of tax money, “further identify and amend the tax laws’ loopholes.
“Promote fiscal discipline by reducing the cost of governance and strictly complying with Section 41 of the Fiscal Responsibility Act and Section 38 (sub-section 2) of the CBN Act.”
