Capacity Utilization in Manufacturing grew by 5.3points to 59 percent in Q4 2021

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The manufacturing sector in a MAN Economic Review for second half of 2021 showed an increased in Capacity Utilization by 5.3 percentage different to 59.0 percent in the second half of 2021 from 53.7 percent recorded in the corresponding half of 2020.

 

 

The Manufacturers Association of Nigeria (MAN) comprised 400 Chief Executive Officers (CEOs) of MAN member-companies across the six geo-political zones and Sectoral Groups of the Association has stated in the reports for the six months in 2021 released recently for the sector disclosed that the Manufacturing Capacity Utilization within the sector grew by 5.3 percentage to 59.0 percent in the second half of 2021 from 53.7 percent recorded in the corresponding half of 2020; thus, indicating 5.3 percentage points increase over the period. According to the report it increased by 6.6 percentage point when compared with 52.4 percent recorded in the preceding half.  Capacity utilization in the sector averaged 58.9 percent in 2021 from 49.5 percent average of 2020.

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“The increase in manufacturing capacity utilization is due to the phasing of economic and social restrictions meant to contain COVID-19 pandemic and the full rebounding of economic activities globally and in Nigeria within the period.

 

In addition, the reports indicated that there are increased capacities in the paper subsector brought in by 5 new paper mills that are into recycling of waste papers to produce cartons. Also, disclosed that the additional capacities as BUA Group introduced a cement factory in Sokoko and the new African Glass Limited factory that produced glass products. Unfortunately, the report further noted that manufacturing activities in the non-Metallic Minerals sector have been persistently low following the exclusion of some of the veritable raw materials for glass production which are imported from the official forex window.

 

The Association in the report observed that the situation is worsened by the limited availability and high cost of prospecting for local development raw materials in the country adding that capacity utilization in the sector averaged 49.5 percent in 2021 as against 49.9 percent of the 2020.

 

“The Manufacturing sector recorded a growth rate of 2.28 percent in the fourth quarter of 2021 which revealed an increase of 3.79 point when compared with -1.51 percent recorded in the corresponding quarter of 2020.  However, the sector’s performance contracted by 2.01 point in comparison to 4.29 percent recorded in the preceding quarter of 2021, it added.

 

“The positive performance recorded in the manufacturing sector in year 2021 is attributed to the palliative measures imposed by Government to salvage the sector from the effect of Covid 19 pandemic. Nevertheless, to improve and reposition the sector back as the engine of growth, there is need to maintain those policies and formulate others that will encourage investments especially on the stability of exchange rate, development of local raw materials, protection of lives and properties among others, it stressed.

 

The MAN in conclusion noted that the year 2021 provided the opportunity to redress the staggering negative impact of COVID-19 Pandemic on global, national, and industrial scales. Just as world economy strongly rebounded in 2021 following the continuous containment of the pandemic and the opening of global economies, the Nigerian economy and the manufacturing sector also reflected this positive movement in their output growth in the year. According to the report the economy leapt from -1.94 growth rate in 2020 to 3.38 percent in 2021, just as the manufacturing sector growth increased from -2.85 percent in 2020 to 3.37 percent in 2021.

 

However, it said, notwithstanding the improve performance of the manufacturing sector during the year, it is still far beyond its potential growth and contribution to national output due to an almost innumerable challenges confronting the sector.

 

Association, therefore said Government should create plausible incentives for investment in the development of raw materials locally through the Backward Integration and Resource based industrialization initiates. We recognize an urgent need for investment and production of Active Pharmaceutical Ingredients (API) in the country; this should be adequately incentivized to encourage significant private investments, it affirmed.

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The MAN further recommended the following points:  saying government should ensure commitment to increase the electricity supply from the current 10,000MW, embrace and support significant development of energy mix and renewable: the country has huge potentials for Solar and Wind and Sustain the Eligible Customer scheme and extricate the “debt clause” to allow manufacturers to participate in the initiative.

 

Others are: rehabilitate existing major road corridors and construct new ones for seamless movement of raw materials to factories and finished goods to the markets and deepen the ongoing development of rails system to change narrative on operating environment from being high cost to low production cost environment

 

While the Global Manufacturing: “According to the United Nations Industrial Development Organization (UNIDO), COVID-19 pandemic came at a point that global economy was already weakened by protectionism and rising trade tensions between America   and China.

As the world economy improved, global manufacturing production also improved with a growth rate of 3.3 percent (year-on-year) in the fourth quarter of 2021. Africa’s manufacturing achieved a moderate growth in output of 2.6 percent while Nigeria recorded 2.4 percent growth in the fourth quarter of 2021 according to UNIDO.”


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