By Merit Ibe, [email protected]
Manufacturers and Micro Small and Medium Enterprises (MSMEs) are currently on ventilators, literally speaking, as the audacious and frequent policy shifts by President Bola Tinubu, since he assumed office on May 29, 2023, have upset the hitherto fragile operating environment. This has resulted in the tumbling of the naira, high inflation, ballooning unempoyment, exodus of multinationals and avoidable shutdowns of local businesses.
Manufacturers and SMEs insist they are worst hit by the storm and have amplified their calls for policy adjustments and other interventions to fly past the rough air.
They are unanimously calling for the immediate release of N200 billion palliative promised them by the federal government to strengthen their shock absorbing mechanisms.
On a nationwide broadcast on July 31, 2023, President Tinubu said he would provide N200 billion to strengthen the country’s manufacturing and MSMEs.
The palliatives were meant to provide N75 billion to manufacturers and N125 billion to MSMEs and be executed between July 2023 and March 2024.
“To strengthen the manufacturing sector, increase its capacity to expand and create good paying jobs, we will spend N75 billion between July 2023 and March 2024. Our objective is to fund 75 enterprises with great potential to kick-start sustainable economic growth, accelerate structural transformation and improve productivity.
“Each of the 75 manufacturing enterprises will be able to access N1 billion credit at 9% per annum with maximum of 60 months repayment for long term loans and 12 months for working capital.
“Our administration recognises the importance of micro, small and medium-sized enterprises and the informal sector as drivers of growth. We are going to energise this very important sector with N125 billion.”
President Tinubu also announced that his administration would fund 100,000 MSMEs and start-ups with N75 billion.
He added that the executive orders on suspension and deferred commencement of some taxes would provide the necessary buffers and headroom to businesses in the manufacturing sector to continue to thrive and expand.
While manufacturers and SMEs salivate in anticipation of the bailout, they have also begged the federal government to urgently tackle the thriving insecurity and the horror of multiple taxation. Business owners who spoke to Daily Sun complained that things have never been so bad as there is no way this administration can be scored good with unfulfilled promises and policies that caused untold hardship to Nigerians since inception of the present administration.
The operators are pained that businesses have been plunged into untold hardship despite efforts to save the situation by the federal government.
One major decision President Tinubu took on his inauguration day was the removal of fuel subsidy.
The sudden announcement led to an unprecedented hike in prices of fuel prices and goods.
After a while, many businesses shut down as a result of the surge in petrol prices occasioned by the subsidy removal and the naira devaluation.
The twin reforms suffocated businesses and made the business environment difficult for SMEs and manufacturers.
According to the Nigeria Association of Small Medium Enterprises (NASME), about 10 percent of the 40 million MSMEs in the country shut down since the subsidy removal. The Association of Small Business Organizations of Nigeria (ASBON) projected that more than 20 percent of their 27,000 members have been affected by the mounting economic woes.
Before the present administration of President Tinubu, manufacturers and MSMEs operators in Nigeria have been grappling with a combination of issues, including poor power supply, rising borrowing costs, soaring inflation, restrictive economic policies, foreign exchange volatility, tax multiplicity, among others.
The harsh economic environments, lack of access to capital and poor business practices, stunted the growth of the sectors.
With the promise of the new administration to better the business environment, there was a glimmer of hope, but to their surprise, one year in office, there seems to be no hope as all the promises for palliatives and funds to alleviate their pains and provide a better environment seem to have fallen to the ground.
Rather, what they got, according to the operators were increased taxes and suffocating policies too bitter to chew.
The policies which range from fuel subsidy removal, floating the local currency, lifting foreign exchange restrictions, new taxes in various forms, paralysed businesses, with many still struggling to survive due to increased operating costs, forex scarcity, reduced demand and disrupted supply chains, among other challenges.
It is one year now that the president made the promises, so far, business owners and associations have said they are yet to see any evidence of the funds.
In recent months, rising inflationary pressures have weakened the purchasing power of cash-strapped consumers, while businesses grapple with higher operating costs. This has forced many companies to exit the country and small businesses to close shop.
On the imposition of overlapping taxes choking the sector, the Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir noted that taxes from federal, state and local governments impact manufacturing, hindering the development and competitiveness of the sector.
“The imposition of overlapping taxes has created compliance burdens, operational inefficiencies, and reduced profitability for manufacturers. Duplication of taxes increases production costs and final prices of goods and services, eroding profit margins and hindering investment incentives.”
On the delay of funds, Ajayi-Kadir noted that the process needed to be faster, urging government to expedite action to ensure these facilities are available, particularly with the agreement with labour.”
He maintained that the N75 billion and N125 billion would not address the crises in the sectors but that a deliberate attempt at prioritising loan facilities at an interest rate repayable by manufacturers would have helped.
Collaborating the MAN boss, Chairman, SMEs Group, Daniel Dickson-Okezie noted that it is obvious that manufacturers are finding it difficult to cope with the high cost of fuel or energy, electricity with the inflation rate driving businesses underground coupled with the multiplicity of taxes and delay in the funds and grants by government.
To him, things have never been this bad.
“There is no way anyone would score this administration good.
Nigerians have never had it this bad since the inception of the Tinubu administration.
“To prove that things are very bad as far as manufacturing and MSMEs are concerned, you can see the number of multinationals that have left Nigeria since last year.
It is obvious that this is not the best of times for manufacturers and businesses.
“The inflation rate has been terrible. The cost of things are so high now. To run a business in Nigeria is a major problem. Prices cannot be predicted, so we have a condition that is above hyper inflation that you cannot predict what will happen the next day.
The cost and availability of petroleum products is no more news.
“The president removed the subsidy on fuel on his inauguration and created a big problem, from there on, forces of demand and supply and other problems crept in due to the premature announcement. Scarcity and black market . Nigerians are going through a lot.”
“He has not fulfilled the promises he made to manufacturers’ to better the business environment..
“He promised to strengthen the manufacturing sector and SMEs, due to the out cry over the impact of the subsidy removal and the forex unification which he hurriedly introduced on assumption of office..
The twin reforms have suffocated businesses and made the environment difficult.
“The 75bn promised manufacturers and 125bn to SMEs between July 2023 and March 2024 have practically not come to light.
And the issue of palliative in form of grants and loans to manufacturers and MSMe has not come to light.”
On the funds promised, Dickson-Okezie said authoritatively, that as one of the leaders of MSMEs in Nigeria, nothing has been done, advising that government should list and publish the names and businesses it has released the monies to indicating their CAC numbers.
“The best thing for government to do is whenever they say they are releasing the funds to manufacturers and MSMEs , they should list and publish those who it has released the monies to indicating their CAC numbers.”
For the former chairman, MAN, Frank Onyebu the past one year has been tough, “tougher than what most people expected or even imagined. It has been tough for the populace, for businesses and tough for me as a manufacturer.”
Onyebu urged the administration to take a holistic look at its policies and see what it can do to improve the lives of the people and businesses of this country. I’m not saying that the government should throw away all its recent policies and decisions. No, by no means! What I’m saying is that these policies should be rejigged to give them a human face.”
He pointed out that the emphasis thus far appears to be on increasing revenues, noting that the body language of most government officials appears to be: Tax, tax and tax.
“Raising revenues by every possible means appears to be the norm. However, these officials need to understand that dead people don’t pay taxes, neither do dead companies!.”
So my expectations for the future, especially for the next 100 days, would be for the government to take a holistic look at its policies and see what it can do to improve the lives of the people of this country.
In her view, Gertrude Akhimien, Chairman, National Association of Small Scale Industrialists (NASSI) blamed the president for the sudden removal of the fuel subsidy, which she said is one of the reasons for the present hardship experienced by Nigerians and businesses.
Akhimien said it was a good decision, but that there were no plans to cushion the effects of the removal and that the timing was wrong, noting that the implementation of some of the administration’s policies were not working well.
She lamented that many of the MSMES were suffering, as a number of them have shut down their businesses, “waiting till things get better for them to operate. Some businesses that are still running are just keeping busy.”
She called for better policies and improved business environment, adding that government should review its policies rather than churning out more.
On the issue of the promised loans and grants, Akhimien said: “Well I have not really heard of anyone that has collected the loans. In NASSI from Lagos here where I am the chairman, not one person has collected any loan.We hear that the loans are being given but I’ve not seen a recipient around me or entrepreneur that has collected and that is the truth.”
On the promises made by the president, she noted that the president may have good intentions, but implemention has been a problem.
“It appears that those who work with him don’t buy into his dream or his vision. It appears the president does not follow up to find out if what he said is being carried out.”
Lamenting that MSMEs are worse of in this administration, she said there was no hope to improve on their circumstances.
“ The economy is so bad and they cannot continue to sustain their businesses . Apart from the fact that power is epileptic, the cost of power now has driven the cost of doing business higher than normal. So that at the end of the day we cannot make the kind of profit you need to remain and sustain the business.
“That is a major problem, I don’t know how government can address it. Government has to go back to the drawing board to solve this problem.
MSMEs are complaining, manufacturers, are leaving the country. We local players can’t leave , its our country, some of us are scaling down to continue in business. Waiting till a better time to resume business.
“As an optimist, I believe there is still hope. Government needs to sit back and do a review rather than churning out new policies. Government should try to improve on the already implemented policies because if things get worse, I don’t know what will happen .
“I don’t recommend that government should implement new policies. Try and see how the reviewed policies can benefit the MSMEs as the backbone of the economy. If SMEs shut down, without trading and doing business, there will be problem for the country, as government alone cannot do it.
She called on government to interface with the Business membership organisations (BMOs), so they can get real time information about the goings on.
As it is now, those who are being sent are not representing us well. . Government needs a roundtable discussion with the BMOs and send the loans and palliatives directly to those that really need them not through other channels. Then do newspaper publications of the list of BMOs that have got the loans for distribution to the real MSMEs.”
A manufacturer and CEO, Kevin Plastics George Akume, decried the suffocating environment, noting that insecurity, hardship, hopelessness and agony have been inflicted on the citizens due to the hurriedly implemented policies.
“Poverty rate is over 46 percent according to World bank.
Dollar from #268 in 2015 to 1,500 today. It is ridiculous.
“You find companies leaving in droves and dying and that comes with mass unemployment..
The policies are draconian, inhumane, insensitive.”
Akume noted that the president needs no create an economy that can work itself.
“What is the value of the currency, it is dependent on the capacity of that economy to produce competitively so that you can export and earn forex.
What policy have they put in place to encourage local manufacturing..
Nigerians and businesses are hurting and the government must listen. The president needs to discuss with stakeholders before churning out policies.”
