Manufacturers in the country have warned that some allocations, estimations and provisions in the 2022 proposed budget may lead to unsold inventory, job losses and factory closure.
The Director-General of the Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadiri, said this in Abuja on Sunday while reviewing the 2022 appropriation budget.
According to him, the plan to impose excise duty on carbonated drinks and other revenue-generating drive through taxes and levies by the Federal Government will worsen capacity utilisation of manufacturers.
He stated 13 percent inflation rate estimate in the budget was unrealistic.
He said, “All these mean further strangulation of the manufacturing sector that is already burdened with the multiplicity of taxes/levies and fees.
“The industries operating in this segment are already operating with extremely low margins, so the planned excise will push most of them over the edge.
“We risk an unprecedented build-up of unplanned inventory, downsizing of labour force and factory closures.
“All these would vitiate the revenue expectations of government and therefore be counterproductive,” he said.
He said access to long-term funds at low interest rate will encourage manufacturers to increase their investment.
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“Additionally, it would ensure full utilization of idle capacities, increase capacity utilization, upscale manufacturing output and improve its contribution to the Gross Domestic Product (GDP),” he said.
Ajayi-Kadir said that the proposed aggregate capital expenditure of N5.35 trillion, which amounts to 32.64 percent of the total expenditure is commendable.
He said this was against the N4.37 trillion and 32.2 percent respectively of total expenditure in the 2021 budget.
He said that this meant that the sum allotted to capital expenditure would increase appreciably in 2022.
This, the MAN DG said, was particularly for the building materials and construction segment that had higher multiplier effects on the manufacturing sector.
He said, “No doubt, this buttresses the fact that government intends to continue to upscale the development of infrastructure across the country.
“This is a development that MAN considers laudable, because it resonates with our annual advocacy submission to the government on the need to prioritise infrastructure development for sustainable economic growth.
“It will also increase production in the real sector of the economy,” Ajayi-Kadir said.
