By Merit Ibe, [email protected]
The Manufacturers Association of Nigeria (MAN) has lamented the slow recovery from the impact of the naira crunch which caused about 30 percent decrease in sales amidst other challenges.
This is even as the association noted that all the major performance indicators in the sector declined in the second quarter of 2023 (Q2’23).
This was contained in the Q2’23 MAN CEOs Confidence Index (MCCI) survey by the the association.
The MCCI survey, which is conducted quarterly by MAN, shows the perceptions of manufacturers on developments in the macroeconomic environment.
The survey deplored the slow recovery from the cash crunch, high cost of energy, unavailability of forex, high transportation cost and the abrupt removal of subsidy towards the end of the second quarter of 2023.
MAN further noted in the report that aggregate index score of MCCI in Q2’23 declined by 1.4 points to 52.7 points from 54.1 points obtained in Q1’23, which is also 2.3 points less than 55.0 points recorded in Q4’22.
In the course of the survey, manufacturers identified and ranked the current challenges of the manufacturing sector in order of severity of impact.
Based on the ranking, high cost of energy was top on the list of major manufacturing challenges. This was followed by high cost of credit/inadequacy of loanable funds, multiple taxes/charges/levies/same tax policy for local producers and importers, unavailability of raw materials/delay in receiving imported raw materials/high cost of raw materials and scarcity of forex/high exchange rate/poor allocation of forex.
Commenting on the development, Director General, MAN, Segun Ajayi-Kadir said: “Government capital expenditure should address the issues of economic infrastructure of roads, electricity, water, among others that supports industrial sector businesses.
“The absence of economic infrastructure contributes significantly to high cost of operating environment which obstructs the development of manufacturing in Nigeria.
“ Sequel to the above trends, it is highly expedient that the government strives to ensure the harmonization of fiscal and monetary policies that will pave the way for a stable macroeconomic environment needed to promote productivity in the manufacturing sector and improve the ease of doing business.”
According to the association, “manufacturers are in pain due to the operating environment that impacted most negatively on the activities of motor vehicles and miscellaneous assembly, which deteriorated further below the benchmark of 50 points from 48.6 to 46.7 points.
It said: “Production and distribution costs escalated by 17.3 percent in the quarter under review. Capacity utilisation nosedived further by 5.6 percent from a contraction of 5.0 per cent witnessed in the preceding quarter. The volume of production contracted by 6.1 percent in the quarter under review from a contraction of 13 percent recorded in the previous quarter. Manufacturing investment dipped further by 5.6 per cent in the second quarter of 2023 from 3.0 percent contraction recorded in preceding quarter. Manufacturing employment reduced further by 5.7 percent in the second quarter of 2023 from 3.0 percent contraction recorded in the preceding quarter. Sales volume plummeted by 6.3 percent in the second quarter of 2023 against the 13 percent contraction witnessed in the preceding quarter. Cost of shipment rose by 14.3 percent in the second quarter of 2023 though it witnessed a slowdown from the 20 percent increase recorded in the first quarter of 2023.”