The Manufacturers Association of Nigeria (MAN) has disclosed that it is hoping that this year, 2025, the country’s public debt will grow modestly, necessitating a delicate balance between borrowing for growth and maintaining debt sustainability.
Specifically, MAN revealed that the nation’s total debt stock escalated from N87.38 trillion to N134.3 trillion over the last one year without significant patronage of capital goods for infrastructure development and robust economic growth.
MAN, in its economic research findings sighted by New Telegraph, indicated that despite revenue gains from subsidy removal and naira devaluation, the government’s fiscal operation remained constrained by mounting debt pressures.
In fact, the manufacturing body affirmed that domestic and external debt profiles had consistently surged due to rising interest rates and exchange rates.
It stated that in 2024, Nigeria’s public debt reach borrowings to finance critical infrastructure projects.
Debt servicing consumed nearly 162 per cent of government revenues, leaving limited fiscal space for developmental expenditures.
In addition, the removal of fuel subsidies and exchange rate unification compounded fiscal challenges, increasing the cost of external debt repayments due to naira depreciation.
However, despite these pressures, reforms aimed at enhancing revenue generation, such as improved tax administration through the new tax reform bill underway and the expansion of non-oil revenue streams, provided some relief.
MAN stated in the research that implementing fiscal discipline, diversifying revenue sources, and attracting private investments through publicprivate partnerships would be critical to managing debt while fostering economic development.
For instance, MAN mentioned in the findings that the Federation Accounts Allocation Committee (FAAC) disbursement to the Federal Government, states and local government councils (LGCs) increased respectively year-on-year and quarter-on-quarter by 30.2 per cent and 13 per cent from N3.01 trillion in Q3’24 and N3.47 trillion in Q2’24 to N3.92 trillion in Q3’24.
Precisely, MAN emphasised that since June 2023, total distributed FAAC revenue among Federal Government, states and local government councils (LGCs) amounted to N19.07 trillion.
While highlighting manufacturing trade’s performance, the report pointed out that the devaluation of the naira highly contributed to the consistent increase in the value of manufacturing export.
Specifically, it revealed that “manufactured exports rose from N212.14 billion in Q2’23 to N268.79 billion in Q1’24 and N480.82 billion in Q2’24.
This marked 126.7 per cent increase year-on-year and 78.9 per cent increase quarter-on-quarter.
However, the cost of imported raw materials also surged consistently from N567.80 billion in Q2’23 to N1.47 trillion in Q1 2024 and 1.48 trillion in Q2’24.
This shows that the net loss of the naira devaluation has been enormous for manufacturers.
“Similarly, the MAN report also noted that sporadic rise in the cost of imported raw materials had limited the competitiveness of Nigerian manufacturing exporters.
According to MAN, “this is evident by the significant decline in the share of manufacturing export in non-oil export from 30.24 per cent in Q2’23 to 15.11 per cent in Q1’24 before rebounding to 24.73 per cent in 2024. “Nonetheless, it is yet to retain its initial contribution to non-oil export.
The share of manufactured export in total export also dropped from 3.3 per cent in Q2’23 to 1.4 per cent in Q1’24 before rebounding to 2.48 per cent in Q2’24.
However, it is yet to retain its initial contribution to total export.
“Speaking on the key business risks in 2025, the Director-General of MAN, Segun Ajayi-Kadir, explained that businesses would have to worry about the following risks as they craft their strategies for 2025. Exposure to the risks vary across sectors.
Businesses would therefore need to calibrate their strategies according to the level of exposure to some risks, including, forex volatility risk, interest rate risk, inflation risk, financial and monetary policy risk, regulatory risk, cybersecurity risk, insecurity risk, political risk, corruption risk, especially with regard to public sector transactions and contracts, environmental / climate change risk.
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