The Manufacturers Association of Nigeria, MAN, has expressed fears that worse fate awaits the economy on the heels of a likely late passage of the 2019 budget. They also projected that developments in the global economy, especially in the area of interest rates and tightening commodity markets, would likely contract investment inflow to the country.
In a statement on Wednesday, MAN said: “Being an election year, performance of the economy in 2019 would, to a large extent, depend on the transparency and credibility of the election.
“Distractions from political activities may slow down infrastructure spending and the performance of the manufacturing sector being a sector whose operations relies heavily on these infrastructures.
“Inflation rate might slightly increase due to electioneering spending resulting from heightened political activities and lack of proper policy coordination.”
“Even though the Central Bank of Nigeria is in a stronger reserve position than in recent years, there may be a slight depreciation of the value of Naira due to the recent pressure on the country’s external reserve, amidst the continuous dip in oil prices and the usual withdrawal of foreign capital as a result of anticipated political uncertainty.
“More pressure may be mounted on registered companies by Government Agencies in a bid to vigorously drive for revenue to salvage the precarious status of the country’s debt service to revenue ratio” it stated.
The report stated that the proposed 2019 budget appears to be an extension of 2018 as no new grounds were explored.
It also harped on the need to properly align the assumptions of the budget with economic realities.
On the positive note MAN stated: “No doubt, some of the provisions of the budget would be very important in supporting economic activities in the coming year. The huge emphasis on infrastructure development, especially power, road and rail is encouraging.”
The manufacturers body is of the opinion that a lot of works still need to be done while hoping that it will be passed with dispatch.
It concluded: “In broad terms, the manufacturing sector could be in for a tough operating environment in 2019, seeing that the needed supporting policies and infrastructure have not been given sufficient priority.”
They, however, expressed hopes that the capital expenditure component of the budget will be conscientiously implemented.
In order to achieve the set budgetary objectives, MAN said it is important that Government should be extra cautious of its rising debt profile in view of the associated services charges and the future economic burden that this will exert on the nation.