The Manufacturers Association of Nigeria (MAN) has designed an instrument called and known as Manufacturers CEO’s Confidence Index (MCCI) which measures changes in pulse of operators and trends in the manufacturing sector quarterly.
According to the surveyed conducted by over 400 Chief Executive Officers of MAN member-Companies of MAN findings from the sectoral analysis shows that Index score of Wood & Wood Products sector is 49 points in the second quarter of the year, which is a marginal uptick from 48.9 point obtained in the first half of the year, even though it is below the 50 baseline points. The index score of Electrical & Electronics group improved to 50 points from 49.9 points obtained in the preceding quarter adding that the index of the Motor Vehicle & Miscellaneous Assembly moved above the baseline to 50.1 points from 49.2 points of the preceding quarter, it added.
Based on the above backdrop, the report noted that activities in the Wood & Wood Products and Electrical & Electronics sectoral group signaled an improvement over the results of the first quarter despite the fact that the operations of the groups were most impeded by unfriendly operating environment.
However, the report further stated that the Motor Vehicle & Miscellaneous Assembly group appeared to be gradually finding its footing back after operational difficulty in the first quarter of the year.
“The effect of the Russian-Ukrainian war clearly underscored the popular maxim that the world has become a global village. The occurrence of an incidence in a part of the world, notwithstanding how specific we may think, can actually become a global issue.
“Therefore, apart from the need for ardent management of global peace, the series of global occurrences and the lessons learnt demand that national Governments should begin to take drastic measures to manage these phenomena proactively going forward. Undoubtedly, phenomena such as the China-America trade war, the Asian and Global Financial crises, the challenges thrown up by COVID-19 pandemic and now, the Russian-Ukraine war call for the development of a sustainable national anticipatory policy measures, it added.
The report pointed out that the Aggregate MCCI score of 54.6 points for the quarter under review, which is above the 50 baseline points by 4.6 points shows that manufacturers still have minimal confidence in the economy, with the expectation of improvement in the operating environment. For instance, the report highlighted that the performance of Bauchi/Benue/Plateau and Rivers zones with index scores below the baseline points is a serious cause for concern. The business ambiance in the second quarter was no doubt beset by numerous macroeconomic, regulatory and externally induced challenges, compounded by the lingering backlashes of COVID-19 pandemic and the ongoing Russian-Ukrainian war, stressed further.
Clearly, the report pointed out the resultant effects of these challenges continue to manifest in the escalation of global inflation, shortfall in the global supply chain followed by the rise in energy cost, fertilizer and fertilizer inputs, wheat grain, etc. Cumulatively, these challenges interplayed to shape the direction of performance of the manufacturing sector in the second quarter of 2022, added.
“It is therefore important for the Government to intentionally create an anticipatory policy framework that will facilitate automatic stabilization of the economy in the event of domestic or global shocks, while addressing the afore-mentioned familiar operating challenges limiting the performance of the sector.”
MCCI Index administer on standard diffusion factors of Current Business Condition, Business Condition for the next three months, Current Employment Condition (Rate of Employment), Employment Condition for the next three months and Production Level for the next three months. The report disclosed that the index has a baseline score of 50 points and scores above the baseline indicate improvement in manufacturers’ confidence in the economy, while index score of less than the baseline suggests deterioration in the operating environment.
The over 400 Chief Executive Officers of MAN member-Companies MCCI report meagre improvement in the index score in the second quarter of 2022 implies that manufacturers’ confidence in the economy slightly improved above what obtained in the preceding quarter.