A welcome decision but…

The Federal Government is working on a plan towards reducing the cost of gas for power generation as part of an effort to boost the manufacturing sector. Minister for Industry, Trade and Investments, Otunba Niyi Adebayo, said this at a recent roundtable discussion on the industrialisation of Africa organised by the Manufacturers’ Association of Nigeria.

Adebayo said cost competitiveness in the manufacturing sector was a major challenge identified by industry players. According to him, Africa contributes less than two per cent to international trade, pushing it to the bottom of the global value chain. He said that led to lower export trade volumes, lost job opportunities and reduced foreign exchange for players in the continent’s real sector.

The minister said for Nigerian industries to lead the transformation of the country and continent’s economies, all stakeholders must work together towards developing measures to improve the cost competitiveness of the sector in the country.

He said, “For example, we are collaborating with the Ministry of Petroleum Resources to lower the cost of gas which is critical to the production of the energy sector. This is one factor that can improve the cost competitiveness of the sector. Another way that Nigerian industries can position themselves for the African economic transformation is by aligning themselves with the country’s industrialisation programme.

“On our part, we are accelerating the establishment of world-class special economic zones in Lagos, Abia and Kano, among others, which will drive our industrialisation programme by increasing the concentration of high quality infrastructure and providing fiscal incentives for producers in the sector.”

The minister urged manufacturers to take advantage of the SEZs and the wider market of 1.3 billion provided by the African Continental Free Trade Agreement. He said the AfCFTA’s potential could only be reached by private sector-led investments.

We welcome this plan of the government to reduce the cost of industrial gas for manufacturers. No doubt, this will enable them produce more goods and services at lower costs. When this happens, the price burden on consumers will be less. Ultimately, the economy will benefit through a lower inflation which, at the moment, stands at two-digit 18 percent.

However, we are just worried about the high cost of cooking which has risen by more than 100 percent. Manufactures say the reason is that 75% of the commodity is imported and also because the government has doubled import duty. They demand that it allow the Nigerian National Petroleum Company (NNPC) to increase its cooking gas production quota to reduce the high cost of the commodity.

We support their request. The ever rising price of cooking gas means less demand and loss of profit for producers. The multiplier effect is that low income consumers who can longer afford gas and cannot revert to even kerosene because it is costlier will now go back to charcoal. This will cause more felling of trees to make fuel wood.

Tree felling will hasten desertation, something the government is pushing to stop. Desertation is bad for agriculture because it causes aridity and low crop. The government wants to grow agriculture’s contribution to the GDP by more than its present 2%. Unstoppable desertation will make this goal harder to achieve. This is why we are making a case for a reduced cost of cooking gas so that people will not go back to cutting down trees for fuel wood.