The Manufacturers Association of Nigeria (MAN) has said that President Bola Tinubu's economic plans will be ruined by Nigeria's anticipated N77 trillion debt problem.
The Debt problem in Nigeria, which has seen the country's debt profile climb by 410 percent over the last eight years, has also hurt manufacturing, according to MAN.
The first quarter 2023 (Q1'23) MAN CEOs' Confidence Index (MCCI) study, which Vanguard was able to receive, stated: "The domino repercussions of rising public debt on the manufacturing industry are limitless.
"First, growing domestic debt is severely inhibiting private investment in the manufacturing sector by limiting credit availability and driving an increase in lending rates.
The increasing demand for foreign currencies further weakens the naira and increases the cost of importing crucial non-locally produced inputs for manufacturing. External debts are typically repaid in foreign currencies.
"In addition, rising loan servicing is using up more foreign exchange, aggravating the long-standing forex shortage in the manufacturing sector. Increased Revenue is necessary to repay greater debt.
"In an effort to raise money, the Nigerian government has continued to foster a hostile business environment via arbitrary imposition of high and multiple levies on manufacturers.
"Low foreign investment and inflow of foreign capital due to high public debt worsened the forex scarcity that has remained a sore spot for manufacturers."
Contrary to common belief in official circles, which holds that Nigeria has a revenue problem, the country's debt crisis is not the result of insufficient revenue, and it is anti-growth to consider manufacturing taxes as a last alternative for dealing with the debt issue.
"The manufacturing sector, which has consistently been the victim, has not noticed any appreciable effects from debt financing on the myriad problems that have plagued its performance for many years. MAN members find it difficult to swallow the words "infrastructure decadence," "forex scarcity," "credit crunch," and "naira depreciation" notwithstanding the country's massive increase in debt of almost 410% during the previous eight years.
The siphoning of collected revenue so that it does not appear in the records, not revenue creation or collection, is Nigeria's main problem despite its many levies.
"MAN is of the view that debt worth of N77 trillion is an enormous burden to inherit and will probably limit the achievements of the new administration," the study states.
MAN's recommendations for the future were to: "Increase the revenue base by enlarging the tax base through improved data capture of business operators in the informal sector.
"Strictly execute the Federal Inland Revenue Service's (FIRS) Voluntary Assets and Income Declaration Scheme (VAIDS).
To further limit the leakage of tax revenues, "identify and rectify the tax laws' loopholes.
Reduce the cost of governance and rigorously adhere to sections 41 of the budgetary Responsibility Act and section 38 (sub-section 2) of the CBN Act to promote budgetary discipline.
