There are palpable fears that the Nigeria’s economy faces uphill tasks as prices hit roof tops following crash in oil prices, devaluation of the Naira by the Central Bank and the upping of Cash Reserve Ratio.
Manufacturers have since raised the alarm that Nigerians should expect inflationary trends in 2015 as the cost of production has since increased in an unassuming fashion.
Still being agonized under the yoke of devaluation of the Naira, occasioned by sudden crash in crude oil price, the Manufacturers Association of Nigeria (MAN) said the business environment is not conducive as it were.
Increase in prices, they say, is the only way local manufacturers can break even and remain in business.
Commentators say the current currency parity is detrimental to industrialization and may lead to job losses, amidst the continuing bearish state of the capital market, as well as the recent increase in Monetary Policy Rate, MPR (interest rate).
Manufacturers who hurriedly converged also fear that the country is currently facing investment fears, owing to the about 30 percent interest now being charged by Nigerian banks as a result of the upping of the MPR by the country’s apex bank.
Local manufacturers and as well consumers are in for a precarious situation as prices will unavoidable go up, experts posit.
They say another production dilemma for manufacturers is the scarcity of gas to fire their various plants. This is in addition to numerous unfavorable social, economic and political constraints inhibiting the smooth prospect of doing business in the country.
Perhaps the biggest fear is job losses with its attendant political and social implication, they say.
The price increase of goods is coming amidst yet a season of controversial Appropriation Bill of N4.358trillion presented on December 18 to the National Assembly.
But the financial crisis seems deeper.
Governor of Edo State Comrade Adams Oshiomole encapsulated the hurddles: “Things are tougher now around the country because the Federal Government mismanaged our national resources…Now oil price
has dropped to $60 and because we have not saved, the naira is undergoing devaluation already as low as N180 per dollar, and I believe by February when elections are over nobody will want to hold the naira. Whichever way the election goes, I expect that the Naira will hit over N200 per dollar.”
He added: “The inflationary consequence of that is that the inflationary consequence of that is prices of everything will go up, and part of the vicious cycle of the devalued Naira is that the prices of petroleum products imported in dollars will go up in Naira.”
Economists argued that they expect prices to go northward if the manufacturers must stay afloat.
Those to be mostly affected conclude include those in: Food and Beverages sub sector, Cement and building sector, imported vehicles, household materials, machineries, textiles, communication gadgets among others.
Only recently, Nigeria is said to have lost a staggering $40billion in three months-according to Forbes.
But the government is not disturbed. It is optimistic that Nigeria will maneuver its way out of the murky waters.
An aide to Finance Minister Mr. Paul Nwabuikwu said that many oil based economies also face the same challenge. He said government was taking proactive steps to minimize the impact on Nigerians.
Not only the Comrade Governor and Economists that have passed down a damning verdict on the Nigerian economy, international rating agencies and multilateral organizations like Fitch and IMF fear for Nigerian economy.
Despite the ‘proactive steps’ taken by government, the IMF and International rating agency- Fitch-have forecasted a negative outlook for Nigeria’s economic sector; a trend, they say will be compounded by inflationary trend that has already set in amidst unfavorable currency exchange impacting negatively on local manufacturers.