claims that debt could impede Tinubu’s administration’s accomplishments.
The Federal Government is putting the weight of its N77 trillion debt on Nigeria’s manufacturers, according to the Manufacturers Association of Nigeria.
The association added that a number of hefty taxes have been imposed on its members.
“Dominant effects of escalating public debt on the manufacturing sector are endless,” according to the Manufacturers CEO Confidence Index (Q1 report, titled “Special Focus: MAN at the Receiving End of National Debt Crisis”) released by MAN on Monday. The research also included information on the nation’s tax burden.
The association observed that private investments in the manufacturing sector are having an adverse effect due to Nigeria’s increasing domestic debt.
It claimed that this results in fewer credit facilities being available and higher lending rates.
It became out that paying off foreign debts is another factor contributing to the naira’s depreciation.
Citing the “indiscriminate imposition of high and multiple taxes on manufacturers,” MAN held the FG responsible for the unfavorable economic environment in the nation.
“To begin with, increasing levels of domestic debt are severely restricting private investment in the manufacturing sector by driving up lending rates and limiting credit availability. “Since external debts are primarily paid for in foreign currencies, a strong demand for foreign exchange further weakens the naira and drives up the cost of importing vital non-locally produced inputs for manufacturers.”
Additionally, increased loan servicing is using up more foreign exchange, exacerbating the long-standing shortage of foreign exchange that has afflicted the manufacturing sector. More income is needed to pay off higher debt, the statement continued.
The statement said, “In an effort to raise money, the Nigerian government has persisted in creating a harsh business environment by indiscriminately imposing high and multiple taxes on manufacturers.”Massive state debt exacerbated the currency constraint that has continued to be a pain in the neck for manufacturers by reducing foreign investment and capital inflow.
The association issued a warning to the government, telling it not to view the high taxes imposed on the industrial sector as “the last resort” for raising money to pay off the country’s debt.
“The country’s debt crisis is not a result of inadequate revenue, despite the popular belief in government circles that Nigeria has a revenue problem. It is anti-growth to view manufacturing taxes as the last resort for curbing the debt problem.”
MAN pointed out that the nation hasn’t yet felt the effects of its debt financing on the many difficulties facing the industry.
“The manufacturing sector, which has historically been the recipient of debt financing, has not experienced a discernible effect from the debt financing on the various issues that have plagued its performance over the past several years. Notwithstanding the enormous rise in the nation’s debt profile of more than 410% over the previous eight years, MAN members are terrified of the country’s infrastructure degradation, currency scarcity, credit crunch, and depreciating value of the naira.
“In spite of numerous taxes, Nigeria’s true issue is not the creation or collection of revenue, but rather the embezzlement of collected funds to conceal them from official records.”
“MAN believes that inheriting N77 trillion in debt is a huge burden and will probably restrict the accomplishments of the incoming administration,” the statement continued.
The association suggested that the FG do the following: 1. Expand the tax base by capturing more information about informal sector business owners in order to increase revenue base.
2. Use the Federal Inland Revenue Service to strictly implement the Voluntary Assets and Income Declaration Scheme.
3. To stop tax revenues from leaking away, find and fix more loopholes in the tax code.
4. Encourage financial restraint by cutting back on governance expenses and closely adhering to CBN Act section 38 (sub-section 2) and Fiscal Responsibility Act section 41.