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2010: Mixed Grill For Nigeria’s Manufacturing Sector

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From all indications, Nigeria’s manufacturing sector has recorded some improvement last year due to a number of reforms initiated by the Federal Government.

The Manufacturers Association of Nigeria (MAN) says that macroeconomic indicators in 2009 showed that the country’s Gross Domestic Products (GDP) grew by 7.0 per cent in the third quarter of  last year, compared with 6.13 per cent in 2008.

The association says the growth was driven mainly by the non-oil sector, particularly agriculture, which accounted for 45.35 per cent of the GDP.

Industry operators attribute the feat to the latest round of Central Bank’s banking reform programme, which started in August 2009, saying that the reform has impacted positively on the manufacturing sector in 2010.

They also note that the Federal Government’s Power Sector Reform Programme, aimed at fully liberalising power generation and distribution, has also boosted production in the manufacturing sector.

They say that the two reforms, if well implemented, are capable of reviving manufacturing activities and the national economy, while aiding the fulfillment of the Federal Government’s Vision 20:2020, aimed at making Nigeria one of the top 20 industrialised countries in the world by 2020.

MAN, at its last annual general meeting, described the latest banking reforms as “timely, creative and critically beyond the teachings of liberal economic theory where the primary role of the central bank is macroeconomic stability and to ensure a stable banking sector’’.

The immediate-past President of MAN, Alhaji Bashir Borodo, conceded that it was rare for the CBN to initiate such initiatives to redeem the real sector of the economy directly, adding that such tasks often fell within the exclusive preserve of politicians, ministers of finance or national planning.

He noted that the World Bank and the International Monetary Fund (IMF) often viewed developing countries’ efforts to inject funds to prop up the real sector of their economies with scorn.

Borodo said that the banking reforms had a three-stage process which was first of its kind in any developing country, adding that the first involved the restructuring of existing short-term, high-interest loans into long-term loans with a low interest of seven per cent per annum.

Under this requirement, banks are expected to give loans to the real sector, using at least 50 per cent of funds received from the Bank of Industry (BOI), while the CBN guarantees loans given to

manufacturers and SMEs under the Medium Enterprises Credit Guarantee Scheme.

“We believe this bold initiative by the CBN will set the standards for monetary intervention in the real sector and will ultimately define the relationship existing between the banking sector and the real sector,’’ Borodo said.

The MAN chief, however, said that for the manufacturing sector, there had been “growing challenges’’, induced mainly by the economic environment of the country.

Industry watchers, nonetheless, commend the Federal Government for approving N150 billion for the manufacturing sector and N100 billion for the textiles sector, out of which N30 billion has already been disbursed through the Bank of Industry (BOI).

In spite of the intervention, experts say that many challenges are still confronting the manufacturing sector, stressing that a major limitation was the country’s energy crisis.

However, the Federal Government is not unmindful of the energy constraints, as it has repeatedly pledged to make electricity more available by 2012 via its power reform programme.

On August 26, for instance, President Goodluck Jonathan launched the roadmap to power sector’s reform, in which Federal Government is expected to sell off its 51 stake in electricity distribution companies and thermal power stations to private investors.

Under the new arrangement, however, the Federal Government will still own the transmission grid but the facility will be managed by private sector operators.

Prof. Barth Nnaji, the Chairman of the Presidential Taskforce on Power Issues, said that the Federal Government was working hard to ensure that some of the electricity companies were sold before the expiration of the administration’s tenure.

The measures notwithstanding, economic analysts contend that the limitations of the manufacturing sector include inconsistent government policies, poor infrastructure, multiple taxation, smuggling and importation of substandard goods.

They also criticise the new Federal Government policy lifting the ban on imported products such as textiles and fabrics, toothpicks and beverages, while extending the age of imported second-hand vehicles to 15 years.

The Minister of Finance, Mr Olusegun Aganga, who unveiled the new policy, defended it as a strategy aimed at encouraging Nigerian importers to use the country’s seaports for imports to generate revenue for the government and discourage smuggling of vehicles in particular.

However, Mr Jaiyeola Olanrewaju, the Director-General of the Nigerian Textiles Manufacturers Association (NTMA), said that the textile sector did not perform well in 2010.

He, nonetheless, said that some textile producers were able to have access to N30 billion, out of the N100 billion which the Federal Government gave to BOI for the development of the textile sector.

Olanrewaju bemoaned the state of Nigeria’s infrastructure, deploring the dismal state of the country’s energy situation in particular.

“Unless the power situation is improved, our industries cannot produce competitively, as imported items will continue to be cheaper than locally produced products,’’ he said.

The NTMA chief stressed that no country could develop without a productive industrial base which was hinged on regular electricity supply.

He described the new government policy lifting the ban on imported items, including textiles, as “absurd’’, particularly when locally produced fabrics could not compete with the foreign ones.

“Stakeholders believe that the ban should be maintained until the operating environment is conducive enough, as most of our textile products cannot compete with imported ones because of high costs of production,’’ he said.

Olanrewaju said that it was incongruous for the government that was struggling to ensure the revival of the country’s ailing industries to initiate such a policy that could provoke the closure of more industries and worsen the unemployment situation.

He wondered how textiles manufacturers would be able to pay back the loans they got from BOI if they were unable to produce and sell fabrics because of the new policy.

“It means the government will have to take over the factories sooner or later when they cannot meet their obligations to the bank,’’ he said.

Olanrewaju identified some of the problems plaguing the sector as poor electricity supply, prohibitive costs of diesel, gas and transportation, as well as bad roads.

Apart from textile manufacturers, other industrialists have bemoaned the government policy relaxing the import restrictions placed on certain manufactured goods.

They argue that the country would soon become a dumping ground for substandard products, stressing that the Federal Government must reverse the policy which, they say, is inimical to the growth of the manufacturing sector.

Alhaji Amuda Obelawo, the Chief Executive Officer of LOPIN Industries, identified the influx of substandard goods into Nigeria as the bane of the country’s industrial development.

Obelawo, who made the observation during a recent inspection of one of his factories by the Standards Organisation of Nigeria (SON), stressed that the importation of poor quality goods would thwart efforts to foster the country’s economic development.

“Government should stop the production and importation of substandard products because the buyers are just being hoodwinked to buy products that are not durable.”

“The proliferation of substandard products in our markets is affecting the national economy and is posing serious threats to the survival of indigenous companies.

“The government is also responsible for the problem because its agencies do not buy ‘Made-in-Nigeria’ products and quality goods because of selfish gains,’’ he said.

Obelawo alleged that many contractors handling federal, state and local government contracts were fond of using fake products in the projects, adding: “That is why we often see new buildings collapse.”

Still on the Federal Government policy, Dr David Obi, a member of MAN’s executive council, stressed that the lifting of the ban on the importation of certain categories of second-hand vehicles was an example of policy inconsistency.

Obi, who is also a member of the governing council of the National Automotive Council (NAC), urged the Federal Government to rescind its policy that increased the age of imported vehicles to 15 years, saying it would cause more harm than good.

He said that such a policy was a disincentive to some automobile companies itching to establish vehicle assembly plants in Nigeria, adding that such plants would also create more employment in the country.

Obi urged Nigeria to take a cue from China, a country which started the development of its automotive industry instead of relying on cheaper alternatives offered via the importation of used vehicles.

“In fact, China was offered thousands of used vehicles free of charge by Japan some years ago but China turned down the offer because it would interfere with plans to build its own automotive industry.”

“Nigeria now wants scraps to be brought into the country as vehicles without regard for the development of its automotive industry,’’ he said.

Obi stressed that the Federal Government ought to protect and nurture the development of the country’s automotive industry, urging it to learn lessons from the U.S. government which had always protected the country’s steel industry against unfair competition.

Reacting to the criticisms of the policy, Alhaji Jubril Martins-Kuye, the Minister of Commerce and Industry, said that the new policy on importation of used vehicles was not just to earn more revenue for government but also to make more vehicles available for the citizens.

He noted that neighbouring countries, such as Benin Republic and Togo, had 15 years as the age-limit for imported used vehicles, adding: “Somehow, these vehicles find their way to Nigeria through smuggling.

“And since the vehicles are smuggled into Nigeria, the Federal Government loses the revenue that should normally accrue to it and this is what we want to stop,’’ he said.

Besides, Martins-Kuye stressed that government only lifted the ban on those textiles that were not produced in the country, saying: “We only unbanned the importation of goods, including textiles, that we are not produced locally.’’

The minister pledged the Federal Government’s commitment to promoting Nigeria’s industrialisation, and explained why it had placed appreciable emphasis on the power sector’s reform, so as to make the country more investment-friendly.

All the same, industrialists have been commending the campaign to promote increased patronage of Made-in-Nigeria products, which started in August 2009, as a tonic that would boost the development of the manufacturing sector.

They, nonetheless, insist that the government should make concerted efforts to tackle the country’s energy crisis, saying that the achievement of a stable power supply in the country would play a pivotal role in transforming the national economy.

The experts also urge the government to provide low-interest credit facilities for manufacturers and reduce taxations on manufactured goods, while raising the duties payable on imported items to encourage local production.

All said and done, the experts believe that the development prospects for the manufacturing sector are quite bright in 2010.

 

Grace Yusuf

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FIRS Clarifies New Tax Laws, Debunks Levy Misconceptions

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The Federal Inland Revenue Service has said that Nigeria’s newly enacted tax laws are designed to strengthen economic competitiveness, attract investments, and improve long-term fiscal stability.
The agency also clarified that the much-debated four per cent development levy on imported goods is not a new or additional tax burden, but a streamlined consolidation of several existing levies.
According a statement released Wednesday, one of the most misunderstood elements of the new tax framework is the four per cent development levy with the agency explaining that the levy replaces a range of fragmented charges — such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy — that businesses previously paid separately.
This consolidation, it said, reduces compliance costs, eliminates unpredictability and ends the era of multiple agency-driven levies. The law also exempts small businesses and non-resident companies, offering protection to firms most vulnerable to economic shocks.
Another major clarification relates to Free Trade Zones. Earlier commentary had suggested that the government was rolling back the incentives that have attracted export-oriented investors for decades. However, the reforms maintain the tax-exempt status of FTZ enterprises and introduce clearer guidelines to preserve the purpose of the zones.
“Under the new rules, FTZ companies can sell up to 25 per cent of their output into the domestic market without losing tax exemptions. A three-year transition period has also been provided to allow firms to adjust smoothly.
“Government officials say the reforms aim to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market”, it said.
With the new measures, Nigeria aligns with global FTZ models in places like the UAE and Malaysia, where the zones function primarily as export hubs for logistics, manufacturing and technology.
The introduction of a 15 per cent minimum Effective Tax Rate for large multinational and domestic companies has also been met with public concern. But the FIRS notes that this policy aligns with a global tax agreement endorsed by over 140 countries under the OECD/G20 framework.
Without this adoption, Nigeria risked losing revenue to other countries through the “Top-Up Tax” mechanism, where the home country of a multinational collects the difference when a host country charges below 15 per cent. By localising the rule, Nigeria ensures that tax revenue from multinational operations remains within its borders.
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CBN Revises Cash Withdrawal Rules January 2026, Ends Special Authorisation

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The Central Bank of Nigeria (CBN) has revised its cash withdrawal rules, discontinuing the special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly, with effect from January 2026.

In a circular released Tuesday, December 2, 2025, and signed by the Director, Financial Policy & Regulation Department, FIRS, Dr. Rita I. Sike, the apex bank explained that previous cash policies had been introduced over the years in response to evolving circumstances.

However, with time, the need has arisen to streamline these provisions to reflect present-day realities.

The statement said the new set of cash-related policies is designed to reduce the cost of cash management, strengthen security, and curb money laundering risks associated with the economy’s heavy reliance on physical currency.

“These policies, issued over the years in response to evolving circumstances in cash management, sought to reduce cash usage and encourage accelerated adoption of other payment options, particularly electronic payment channels.

“With the effluxion of time, the need has arisen to streamline the provisions of these policies to reflect present-day realities,”

“Effective January 1, 2026, individuals will be allowed to withdraw up to N500,000 weekly across all channels, while corporate entities will be limited to N5 million”, it said.

According to the statement, withdrawals above these thresholds would attract excess withdrawal fees of three percent for individuals and five percent for corporates, with the charges shared between the CBN and the financial institutions.

Daily withdrawals from Automated Teller Machines (ATMs) would be capped at N100,000 per customer, subject to a maximum of N500,000 weekly stating that these transactions would count toward the cumulative weekly withdrawal limit.
The special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly has been discontinued.

The CBN also confirmed that all currency denominations may now be loaded in ATMs, while the over-the-counter encashment limit for third-party cheques remains at N100,000. Such withdrawals will also form part of the weekly withdrawal limit.

Deposit Money Banks are required to submit monthly reports on cash withdrawals above the specified limits, as well as on cash deposits, to the relevant supervisory departments.

They must also create separate accounts to warehouse processing charges collected on excess withdrawals.

Exemptions and superseding provisions
Revenue-generating accounts of federal, state, and local governments, along with accounts of microfinance banks and primary mortgage banks with commercial and non-interest banks, are exempted from the new withdrawal limits and excess withdrawal fees.

However, exemptions previously granted to embassies, diplomatic missions, and aid-donor agencies have been withdrawn.

The CBN clarified that the circular is without prejudice to the provisions of certain earlier directives but supersedes others, as detailed in its appendices.

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Shippers Council Vows Commitment To Security At Nigerian Ports

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The Nigerian Shippers Council (NSC)has restated its commitment towards ensuring security at Nigerian seaports.
Executive Secretary/Chief Executive Officer of the Council, Dr Pius Akuta, said this in Port Harcourt, while declaring open a one day workshop organized by the Nigerian Shippers Council in collaboration with the Nigerian police( Marin Division).
Theme for the workshop was ‘Facilitating Port Efficiency; The strategic Role of Maritime police “
Akuta who was represented by the Director, Regulatory Services, Nigerian Shippers Council, Mrs Margeret Ogbonnah, said the workshop was to seek areas of collaboration with security agencies at the Ports with a view to facilitating trade
Akuta said the theme of the workshop reflects the desire of the council and the Nigerian police to build capacity of police officers for better understanding and administration of their statutory roles in the Maritime environment.
He said Nigerian seaports has constantly been reputed as one of the Port with the longest cargo dwell in the world, adding,”This is so, because while it takes only six hours to clear a containerized cargo in Singapore Port, seven days in Lome Port, it takes an average of 21 days or more in Nigerian Ports” stressing that this situation which has affected the global perception index on Ease of Doing Business in Nigerian seaports must be addressed.
Akuta said NSC which is the economic regulator of the Ports has the responsibility of ensuring that efficiency is established in the Ports inorder to attract patronages.
“Pursuant to its regulatory mandate, the NSC has been collaborating with several agencies to ensure the facilitation of trade and ease of movement of cargo outside the Ports to avoid congestion”he said.
Also speaking the commissioner of police, Eastern Port Command, Port Harcourt, CP Tijani Fakai, said Maritime police has played some roles in facilitating Ports efficiency.
He listed some of the roles to include ensuring security and crime prevention at the Ports, checking of illegal fishing activities at the Ports, checking of human trafficking and drug smuggling and prevention of fire incident at the Ports.
Represented by ACP, Rufina Ukadike, the CP said police at the Ports have also helped in the decongestion and prevention of unauthorized Anchorage.
He commended the Nigerian Shippers Council for the workshop and assured of continuous collaboration.
Speaking on the dynamics of cargo handling, Deputy Controller of customs, Muhydeen Ayinla Ayoola, said the launching of electronic tracking system and dissolution of controller General Taskforce has helped to ensure efficiency at the Ports.
Ayoola who represented the custom Area Controller Port Harcourt 1 Area command, however raised concerned over rising national security threat , which according to him has affected efficiency at the Ports.
John Bibor
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