The Manufacturers Association of Nigeria (MAN), said the loss of revenue from the oil and gas sector, which has remained the main driver of the economy over the years, is pushing the national economy to the brink.
MAN said these policies and the evident lack of commitment to implement key policy initiatives in the sector have triggered multiple negative reactions in the economy.
The association’s chief executive, Segun Ajayi-Kadiri, while responding to rising inflation in the country, said the nationwide fuel shortage seen in June was largely responsible for the rise. of inflation.
According to him, the fuel shortage necessitated a further rise in energy prices, particularly diesel, aviation fuel and gasoline prices, all of which impacted the cost of food, manufactures, other commodities, transportation and accommodation throughout the country.
Most notably, the price of diesel has soared about 230% over the past year, he said.
According to the National Bureau of Statistics (NBS), headline inflation for June 2022 stood at 18.6%, indicating a further rise of 0.85% from the 17.75 recorded during the corresponding period of 2021.
On a monthly basis, the SNB also revealed that the headline inflation rate increased to 1.82% in June 2022, an increase of 0.04 percentage points from the 1.78% recorded in May 2022.
Food inflation also increased to 2.05% from 2.01% recorded in May 2022, while core inflation fell from 1.87 in May 2022 to 1.56 in June 2022.
The office has identified the major contributing factor responsible for the spike in headline inflation to include; increase in the prices of gas, liquid fuels, solid fuels, clothing, passenger transport by road, cleaning, repair and rental of clothing and passenger travel by air, meat, bread , cereals, fish, potatoes, oil, fat, wine, yam and other tubers.
In general terms, the inflation rate has taken an upward turn, which of course signals a worsening of economic conditions ahead.
According to MAN, the report revealed that the 18.6% rate portends a gradual journey towards the peak inflation rate of 18.72% recorded in January 2017, which it said is a worrying acceleration in the inflation rate. inflation that should be stopped, especially as the socio-political and economic activities that trigger a surge in inflation are imminent.
The DG underscored the need to strategically position the oil and gas industry to take maximum advantage of future global supply disruptions that trigger a rise in the price of crude oil, adding that “it is appalling that a oil like Nigeria is at a disadvantage”. at a time when world oil prices are rising.
He called on the government to speed up the process to ensure sustainable local refining of petroleum products by reactivating those that are currently idle, to support the commissioning of the Dangote refinery and to issue licenses for new refineries.
This, he said, will clearly reduce the pressure on the foreign exchange reserve and reduce the economy’s vulnerability to the external supply shock that led to the energy crisis.
The MAN boss said it is important that the government strives to always meet the oil production quota set by OPEC, increase oil revenues and reduce the budget deficit which has aggravated inflation .
In addition, he said, the government should introduce pro-investment and security measures that will encourage the influx of private investment into the oil and gas industry to pave the way for rehabilitation. large-scale traditional refineries, develop the regulatory framework for the establishment of modular refineries.
He added: “Amid rising oil prices, the budget authority has strategically reduced the Federation Accounts Allocation Committee (FAAC) payment in May by approximately 9.51%, representing a reduction of 62.4 billion naira, which ideally to some extent should have reduced inflationary pressure.
“However, the CBN’s expansionary policy, which influenced broad money growth by 25.51% over the past twelve months, fueled inflation.”
He said that Nigeria remains a highly import-dependent economy, as such the pass-through effect of the exchange rate continues to aggravate inflation, with the national currency depreciating by more than 22% over the past twelve last months.
“At present, the exchange rate premium has widened further by 194, with the naira trading at around 610 naira/$ and 415.83 naira respectively in the parallel and official markets,” he said. declared.