The Centre for the Promotion of Private Enterprise (CPPE) has called for urgent steps to stem the tide of deindustrialization to curb the growing unemployment and the increasing import dependence of our economy.
DR Muda Yusuf, Director/Chief Executive Officer stated this at the 4th edition of the Business Roundtable of the National Association of Small and Medium Enterprises (NASME), Lagos chapter.
Yusuf said following the collapse of many manufacturing firms (most of them are SMEs), many factory premises around the country have been taken over for activities other than manufacturing.
Yusuf listed some of the factors responsible for the deindustrialization including the influx of cheap and substandard products into the country which creates unfair competition for our domestically produced goods; the crisis in our foreign exchange market which has elevated the volatility in the exchange rate and which has worsened the illiquidity in the foreign exchange; the epileptic power situation; the high cost of energy especially diesel and gas and; the phenomenon of multiple taxations imposed by the three tiers of government.
Others according to him include the challenge of multiple taxation and excessive drive for revenue by agencies of government which imposes a huge burden on our manufacturing industry, especially those who are in the MSME category; poor domestic patronage of what is produced locally; paucity of basic industries to support our manufacturing enterprises.
Such basic industries include the iron and steel industry and the petrochemical industry; policy inconsistency; weak infrastructural base – power, transportation, Apapa traffic issues, railway system, and the ports, among others.
Yusuf noted that the high cost of funds, absence of long-term funds, and challenges of access to credit by MSMEs as well as other firms in the sector, because of the perception of manufacturing is very risky in the economy.
Yusuf said that Small Businesses account for over 50% of the GDP but have access to only 1% of the Bank credit to the private sector adding that this demonstrates the enormity of the funding challenges that are faced by small businesses.
Yusuf noted that the systemic issues of infrastructure should be addressed as a matter of utmost priority, adding that the immediate focus should be on electricity supply and logistics.
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