The President, Manufacturers Association of Nigeria (MAN) during the 2019 Edition of the MAN Annual Media Luncheon for Commerce and Industry Correspondents advice government to 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
MAN President Engr. Mansur Ahmed observed trends in the Nigerian budget cycle and say the 2019 budget proposal might undergo late passage and the resultant negative effect on the overall economic ambience of the country might be colossal for an economy whose current growth rate is still fragile.
Engr Mansur said in specifics, the following issues would likely dominate the country’s economic space in 2019:
- Development in the global scene such as increasing interest rates across large developed markets and tightening commodity markets would likely contract investment inflow to the country, evidenced by capital reversals in emerging & frontier markets observed in the current year;
- Being an election year, performance of the economy in 2019 would depend on the transparency and credibility of the election;
- Distractions from political activities would slow down infrastructure spending and the performance of the manufacturing sector being a sector whose operations relies heavily on these infrastructure;
- 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 would likely be a slight depreciation of the value of Naira due to the recent pressure on the country’s external reserve, the dipping oil prices and the usual withdrawal of foreign capital as a result of anticipated political uncertainty;
- More pressure will 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
He said that the proposed 2019 budget appears to be an extension of 2018 as no new grounds were explored.
MAN president further said that there is the need to properly align the assumptions of the budget with economic realities. 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.
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However, the president said as more development on the budget unfolds, it will be easier to understand why the budget fell short of 2018 figures, notwithstanding the improvements in the global and Nigerian economy.
As the budget stands, MAN opines that a lot of works still need to be done while hoping that it will be passed with dispatch.
“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. MAN is however hopeful that the capital expenditure component of the budget will be conscientiously implemented.”
Shed the current borrowing size of the Government in the domestic financial market so as not to completely crowd-out the private sector, he added