The Manufacturers Association of Nigeria (MAN),  and the Lagos Chamber of Commerce and Industry (LCCI), have warned that the recent petroleum price hike may sound the death knell of the nation’s manufacturing sector, and force small businesses to shut down.

 

 

The two groups gave the warnings,  in separate  statements, issued  on Wednesday, in reaction to the new hike in petrol price, announced by the Nigerian National Petroleum Company (NNPC).

 

 

NNPC had, on Tuesday, announced a hike in the price of petrol from N568 to N855 per litre, to the consternation of many Nigerians.

 

 

Reacting to the development, the two groups argued that such hike may negatively impact manufacturing, since there  may be higher costs  of goods and services, which the average Nigerian consumer may not be able to afford; since their purchasing power has been badly eroded.

 

MAN, in a statement signed by its Director General, Segun Ajayi-Kadir, expressed concerns that the recent hike would see Nigerians left with less disposable income; since they would be  spending more on transportation and energy costs.

 

 

The manufacturers’ group  argued  that a further decrease in the purchasing power of Nigerians would lead to reduced demand for non-essential goods and services. Such development, it added,  would, in turn, negatively impact  the already troubled manufacturing sector, and businesses across various sectors of the economy.

 

 

It also believed that production input and logistics costs would also be impacted, thereby  leading to higher prices, in the face of dwindling disposable income of the average Nigerian.

 

 

According to MAN, small and medium-sized enterprises (SMEs), which often operate on thin margins, could be particularly hard-hit, with the expected costs increase, forcing some of them to scale down operations or shut down, completely; since they would not be able to pass on the additional costs to consumers.

 

 

Also speaking on the issue, LCCI, in its statement, signed by the Chamber’s Director General, Dr. Chinyere Almona, maintained that while petrol subsidy is unsustainable, a complete removal, it believed,  presents significant challenges.

 

 

According to LCCI, a steep price hike would likely trigger widespread price increases, potentially reversing the recent ease in inflation seen in July, and leading to another surge in inflation rates.

 

 

Since fuel prices affect supply and logistics, power generation, transportation and  factory operations,  the Chamber is of the belief that the new price hike would make cost of doing business  and prices of goods to go up.

 

 

“The impact on businesses will be severe, with fuel prices affecting supply and logistics, power generation, transportation, and factory operations. The cost of doing business will skyrocket, prices of goods will rise, and some firms may shut down due to low demand in the face of weakening consumer purchasing power. Of course, this will be followed by job losses,” it stated.

 

 

While expressing its delight at the commencement of  petrol production by Dangote Refinery, the Chamber  called for  additional local refineries that would process the nation’s crude  for local consumption and potential export across Africa.

 

 

As an immediate intervention, the group called on the federal government to fast-track its efforts at ensuring  Port Harcourt Refinery  commence operations alongside production from the Dangote Refinery, adding that relying on local production remains the most viable option out of the current challenges with importing refined fuel.