Multiple taxes and excessive regulation are lowering productivity — MAN

Chief Executive Officers (CEOs) in the manufacturing sector have highlighted over-regulation and multiple taxation as major obstacles to productivity in the second quarter of 2024 (Q2’24), according to a survey by the Manufacturers Association of Nigeria (MAN).

The Q2’24 Manufacturers CEO Confidence Index (MCCI) survey conducted by MAN also pointed out that port gridlocks are detrimental to sector productivity. Additionally, there is concern over delays in implementing the Oronsaye Report and the National Single Window (NSW) project, which are intended to address these issues.

The MCCI measures quarterly changes in manufacturing activities in relation to macroeconomic trends and government policies, based on feedback from CEOs of MAN member companies across Nigeria’s six geopolitical zones.

The survey findings indicated that 90 percent of respondents believe government over-regulation depresses productivity, 90.3 percent cited multiple taxation as a hindrance, and 67.4 percent pointed to port gridlocks as a negative factor.

The country’s tax system is burdened by over 190 different taxes, and the Oronsaye Report, aimed at reducing the number of government departments and agencies, along with the NSW project—a digital platform for streamlining port and trade processes—have yet to be fully implemented.

Conversely, the report noted that 55.6 percent of CEOs observed improvements in local sourcing of raw materials, although only 45.9 percent felt the Executive Order 003 had benefited the sector.

The scarcity of foreign exchange continues to drive local sourcing, but high borrowing costs and insecurity in farming areas are hindering investment in this area. As a result, local sourcing saw only a modest increase of 3.8 percentage points during the review period.

The survey also revealed that only 43.7 percent of CEOs reported a reduction in unsold manufactured goods inventory over the past three months, compared to 56.4 percent in the previous quarter.