MAN reveals what may stall Tinubu’s economic plan
Despite President Bola Tinubu’s bold promise and moves to reposition the Nigerian economy, the Manufacturers Association of Nigeria (MAN) has said that the country’s N77 trillion debt burden may likely jeopardise his economic plans if not addressed.
In its CEOs’ Confidence Index (MCCI) first quarter 2023 (Q1’23) report released recently, MAN noted that the manufacturing sector has been at the receiving end of Nigeria’s debt crisis which has seen the nation’s debt profile rise by 410 percent over in the last 8 years.
According to the union, “The domino effects of escalating 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 hike 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 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.
“Huge public debt led to low foreign investment and foreign capital inflow which worsen the forex scarcity that has remained a bone in the throat of manufactures,” the union stated.
It further said: “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.
“The manufacturing sector which has always been at the receiving end has not felt any significant impact of the debt finance on the numerous challenges that have bedeviled 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 they do not reflect in the records.”
According to the report, “MAN is of the view that debt worth of N77 trillion is an enormous burden to inherit and will most likely limit the achievements of the new administration”.
On the way forward, MAN recommended implementation of the following, among others: “Increase the revenue base by widening the tax net through an enhanced data capture of business operators in the informal sector.
“Strictly implement the Voluntary Assets and Income Declaration Scheme (VAIDS) through the Federal Inland Revenue Service (FIRS).
“Further identify and amend the loopholes in the tax laws in order to reduce the leakage of tax revenues.
“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.”