The Manufacturers Association of Nigeria (MAN) has warned that the recent increase in the pump price per litre of Premium Motor Spirit (PMS), popularly known as petrol by the Federal Government owned Nigerian National Petroleum Corporation Limited (NNPC Ltd) would have severe consequences on the nation’s economy.
MAN while expressing serious concerns over the backlash of the negative impact the increase would have on the economy, said the signal portend danger of a complete collapse of the Nigerian economy as it would have far reaching consequences on the various sectors.
It said that the sectors that would be most affected which would quadruple to other sectors include transportation, goods and services.
Mr Segun Ajayi-Kadir, Director General of MAN, who stated the position of the manufacturers, stressed that the poor state of the nation’s refineries, which are not producing petroleum products, in addition to serious decline in the value of the Naira, will further exacerbate the situation.
MAN also said that the increase in price of pump price per litre of petrol, will lead to higher transportation costs, increased prices of goods and services, and drastically reduced disposable income for consumers.
It said that the development would in turn, result in reduced demand for essential goods and services which would seriously affect businesses across various sectors.
MAN also said that the situation may also lead to a drastic rise in inflation thereby, impacting household budgets and deepening the already lackluster performance of the manufacturing sector.
It also warned that the increased costs will add to production input and logistics costs which would certainly lead to higher prices and reduced consumer demand, stressing that it may result in unplanned inventory rising, reduction in capacity utilization, and negatively impact manufacturing performance.
MAN further said; “Businesses may need to adjust their pricing strategies, which could lead to reduced profit margins if consumer demand weakens.
“Small and medium-sized enterprises (SMEs) could be particularly hard-hit, with some forced to scale down operations or shut down if they are unable to pass on the additional costs to consumers,” it said.
MAN therefore urged policymakers to consider the potential consequences of the petrol price hike and explore measures to mitigate its impacts on the economy, particularly the manufacturing sector.
