As members of the Federal Executive Council resume this week, the ministers tasked with overseeing the nation’s economy face difficult responsibilities and high expectations.
This is because manufacturers, micro, small, and medium enterprises (MSMEs) operators, and other private-sector players are impatient for the government’s economic blueprints to be implemented quickly in order to lift the nation’s ailing economy out of the doldrums.
Some of the ministers on this hot seat are Wale Edu, the Minister of Finance and Coordinating Minister of the Economy; Doris Anite, the Minister of Industry, Trade, and Investment; Adegboyega Oyetola, the Minister of Marine and Blue Economy; and Atiku Bagudu, the Minister of Budget and Economic Planning.
Oyetola was redeployed to the ministry via a statement issued by the presidency Sunday night.
The pressure on these ministers is hinged on the rough patch the private sector has been going through these past months following the flurry of economic policies and reforms being initiated by President Bola Ahmed Tinubu’s administration.
The Daily Post recalls that the President Tinubu-led government had, in quick succession, developed policies that included removing fuel subsidies, floating the local currency, and lifting foreign exchange restrictions.
These policies attracted critical acclaim for the government and bolstered the belief of some experts and social commentators that Nigeria’s economy is on the track to recovery. However, the applause has waned following indications that the economic hardship and the plight of the masses have been exacerbated by these policies.
For instance, Tinubu’s May 29 subsidy removal announcement, although well received among some Nigerians, has brought unprecedented hardship, making it difficult for citizens and business owners to breathe. That mare proclamation saw the rise of the pump price of petrol from N189 to over N500.
Also on Monday, oil marketers hinted that the foreign exchange crisis in Nigeria and Tinubu’s policy to implement a 7.5 percent value added tax on Automotive Gas Oil, popularly called diesel, will push up the cost of the commodity to between N900 and N950 per liter in many states.
These policies have hit SMEs hard, with many struggling to survive due to increased operating costs, currency scarcity, reduced demand, and disrupted supply chains.
The situation is particularly challenging for small manufacturers, who have been facing an acute shortage of raw materials, a slowdown in production, and increased operating costs.
Lamenting their plights, Prince Savior Iche, the national president of the Association of Micro-Entrepreneurs of Nigeria (AMEN), told the Daily Post that the present harsh economy has made many local manufacturers close their factories and lay off workers.
He said, “AMEN has over 800 registered microbusiness owners, but now many of our members have closed down because of the rising cost of operations in Nigeria. And this is not good for our country.
“The government must understand that the MSMEs are the biggest employer of unskilled labor, so when each small-scale industry closes, hundreds of people are losing their jobs. And this further increases Nigeria’s alarming rate of unemployment.
“The new ministers must realize that the private sector and entrepreneurs in Nigeria are really struggling, and many of us are throwing in the towel. These economic policies are adversely affecting us in the country.
“Presently, many business owners can no longer purchase raw materials to produce. For me, I run a cottage industry where we manufacture soaps and cosmetics. And now all our raw materials have increased.
“We used to buy chemicals for N17,000 in 2018, but now these same chemicals are sold for N148,000. The one we used to buy at 10,000 is now 80,000. Even the nylon we use is so expensive now.”
According to the National Bureau of Statistics (NBS), SMEs are critical to Nigeria’s economic development, having contributed over 48 percent on average to the national Gross Domestic Product (GDP) in the last seven years.
However, despite their significance, SMEs often face considerable challenges, including coping with the impact of government policies.
And over the years, governments have fashioned out policies and regulations to maintain stability in the business environment, but some of these policies turn out to be burdens that hinder SMEs from growth and potential.
Hence, Iche called on the new ministers to carry the stakeholders along in the formulation and implementation of economic policies.
He urged them to prioritize initiatives that will help rebuild businesses and stimulate economic growth.
“Most of the government’s drive to boost SMEs flops because it does not involve the real stakeholders in the private sector,” he said.
“The last administration launched an SME clinic project headed by the former vice president, Yemi Osinbajo.
“But I led a one-man protest to call his attention to the fact that the Nigerian entrepreneur and the MSMEs are not sick. So we don’t need any clinic programs from the government. What we need is easy access to loans from the bank.
“The banks in Nigeria are not helping SMEs at all. Most of the money earmarked for MSMEs hardly gets to the true entrepreneurs. They give to ghosts, while the true business owners are starved of funds to grow their enterprise,” the AMEN President added.
Iche stressed that it has become imperative for the government to focus on the manufacturing sector to ameliorate the suffering citizens are passing through.
He further advised the ministers to put in place policies that could unlock value within the sector.
“We want to move from where we are presently, which is importing, to a place where we are exporting more, and so it is imperative we get the manufacturing sector up and running.
“As many companies are closing down and relocating out of Nigeria, the government should channel efforts to support those still alive and encourage new players to come in.
“We, manufacturers, are not only huge employers of labor, but we also hold the key to improving our export quota, wherein we can earn foreign exchange. The pressure on FX will reduce drastically,” he said.
Similarly, Dr. Femi Egbesola, the President of the Association of Small Business Owners of Nigeria (ASBON), agreed that policies like the removal of fuel subsidies and the reforms in the foreign exchange sector have adversely affected small business owners, as they now incur huge losses and setbacks in their operations.
He lamented that many small businesses were no longer running at profit level, stating that sales have dropped sharply and turnover is on the decline.
“This has inadvertently resulted in a drop in production or sales capacity, job losses, a decrease in cash availability, and ultimately a handful of businesses that have gone moribund or experienced total closure. It is indeed a sorry case.”
Egbesola called on the ministers to ensure the strict implementation of the palliatives released by the government to poor households and small businesses.
He also urged small business owners to explore other ways to navigate the situation in order to ensure the survival of their operations.
“Businesses should begin to look at other innovative ways to expand their market beyond the present.
“They should explore online media as a veritable tool to achieve that. Then, for manufacturers, they must begin to source alternative raw materials locally because production should no longer be capacity-driven but solely demand-driven.
“Again, diversification of businesses should be embraced at all costs. And manufacturers must consider value addition and creative packaging and branding to improve their sales of products and services,” he said.
Furthermore, Segun Ajayi-Kadir, the Director-General of the Manufacturers Association of Nigeria (MAN), while lamenting the protracted scarcity of naira notes, which according to him has led to a 25 percent dip in sales of manufactured goods, listed major areas the appointed ministers should utilize to drive the economy and manufacturing sector.
He also called on the ministers to focus on addressing the revival of closed and distressed industries, particularly in the North East, where over 60 percent of companies have closed.
“All ministries, departments, and agencies of government must unfailingly comply with Executive Order 003 on the patronage of made-in-Nigeria products.
“In this regard, there should be strict application of the margin of preference, effective monitoring and periodic evaluation of compliance, and appropriate sanctions meted out to MDAs acting in breach of the executive order,” he said.
For Dr. Muda Yusuf, the Chief Executive Officer of the Centre for Promotion of Private Enterprise (CPPE), the main onerous task for the new ministers should be cushioning the effect of the subsidy on businesses.
He urged the ministers to immediately create a forum for stakeholders’ engagement with manufacturers so that they could deal with the issues more comprehensively and sustainably.
Dr. Yusuf also suggested creating industrial clusters with government-supported infrastructure to promote resource-based industrialization.
He noted that Nigeria had strong policies for industrialization but lacked concrete action and sustainable growth.
He listed weak infrastructure, the high cost of funds, and limited access to credit as key challenges facing the sector.
Hence, to revive the manufacturing sector, the government must prioritize resource-based industrialization and address systemic infrastructure issues.