MAN Urges Government to intentionally put in place mechanism that will address major challenges of manufacturers permanently: in order to improve the performance of the sector.

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The Manufacturers Confidence Index (MCCI) is an index designed by a group under aegis of the Manufacturers Association of Nigeria (MAN) comprised of over 250 members companies to measure changes in quarterly manufacturing activities in relation to movement in the macroeconomy and Government policies.  According to MAN, the Index is therefore barometer used to aggregate the views of 400 CEOs of manufacturing companies on changes in the economy. The standard diffusion factors considered in the MCCI processes include the 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.


MCCI in fourth quarter of 2021 highlighted that there was a gradual improvement in the macroeconomic economic and manufacturing operating environment buttressed by marginal recovery of some key manufacturing indicators. Although, changes in almost all manufacturing indicators as measured in this report are still not as desired, the performance in the fourth quarter is better than what obtained in the preceding quarter.  The resilience of manufacturers, the seasonal transactions and passive policy support sustained manufacturing in the quarter despite the prevalence of familiar and emerging excessive tax related challenges faced by manufacturers. Overall, the sector recorded a mixed grilled performance occasioned by meagre improvement in the operating environment indices and macroeconomic ambience evidenced by the high points, which cumulatively triggered the increase in the aggregate MCCI score for the quarter to 55.4 points from 54.0 points recording the preceding quarter.

According to MAN, during the fieldwork of the report, manufacturers identified numerous challenges that affected manufacturing operation, particularly in the quarter under review. The ranking of issues by CEOs in order of intensity include high cost of local and imported raw materials, insecurity within the industrial areas, shortage of skilled manpower, high cost of transportation, inconsistency in government policies and foreign exchange difficulty. Table 2 below shows the list of some of the manufacturing challenges as ranked by manufacturers in table ‘2’below.

Table 2: Ranking of Manufacturing sector challenges

High cost of local and imported raw materials 1st
Insecurity across the country/Insecurity at the industrial areas 2nd
Inadequate skilled manpower/Skilled labour shortages 3rd
High cost of transportation 4th
Frequent changes in government policies 5th
Increase in exchange rate/Forex instability 6th
Inadequate access to fund/High interest rate on commercial bank loans 7th
Poor distribution channel/Bad road networks 8th
High cost of electricity/Lack of steady power supply 9th
Lack of patronage/Lack of patronage by MDAs 10th
Multiples taxes and levies 11th
Over-regulation by Government agencies 15th
Gridlock at the national ports 16th
High inflation 17th
High cost of adopting advanced technology 18th

Source: MAN Survey

In view of above mentioned challenges by MCCI survey which covered 400 Chief Executive Officers (CEOs) of MAN member-companies across the six geo-political zones and Sectoral Groups of the Association through MAN’s branch networks saying Manufacturing performance is still below the mark, notwithstanding the marginal improvement in the operating environment during the quarter under review, as the sector is still plagued by numerous familiar constraints.  According to the Association, some of these challenges enumerated by manufacturers are clearly presented in this report.


Consequently, the MAN in the report noted that in order to improve the performance of the sector, Government needs to intentionally put in place mechanism that will address these challenges permanently by considering and implementing the following recommendations:

  1. Further incentivize investment in the development of raw-materials locally through the Backward Integration and Resource based industrialization initiates. Government should call for more investor to key into these initiatives with appropriate and definite incentives. For instance, there is need for urgent investment and production of Active Pharmaceutical Ingredients (API) in the country; investment and production of machines; iron and steel; petrochemical materials, etc to support manufacturing activities.


  1. Give specific attention to the security of life and investment in industrial areas; properly delineate and upscale security infrastructure in the various industrial areas in the country, particularly in the northern part of the country for priority attention. Government should also quickly invest in modern security such as drones, camera, etc. for robust monitoring of the areas.


  • Ensure effective allocation of available forex to productive sectors, particularly the manufacturing sector for importation of raw materials and vital machine and equipment that are not available locally. Government also needs to expressly direct the Central Bank of Nigeria to consult with the Ministries of Industry Trade & Investment and effectively engage MAN on measures for improving forex supply to manufacturing concerns.


  1. Direct the Ministry of Science Technology and Innovation to inaugurate the Secretariat that will implement the strategies for the Executive Order and SON to designate local manufacturers of LPG Gas Cylinders as priority provider of the 10 million Cooking Gas Cylinders to be procured by the Government for 12 States in the Federation.


  1. Return Milk and other Dairy Products to the National List in the Fiscal Policy Guidelines to maintain consistency with the Backward Integration Programme, which has spurred heavy investments in the diary production.


  1. Unify academic curriculum with industrial skill needs and requirements to guarantee sustainable development of skilled manpower for the industries. Government should as a matter of urgency synchronize the curricular of tertiary institutions, particularly the Polytechnics with skills requirements of industries.  The various government vocational and training centers should also be re-engineered to offer those skills that are needed by the industries.


  • Revisit the resuscitation of the existing national refineries to produce fuels locally, embark on the rehabilitation of major highway corridors, improve trade facilitation infrastructure and deepen the ongoing development of rails system to change narrative on operating environment from being high cost to low production cost environment.


  • Government should ensure that industrial policies in the country are allowed to gestate with proper monitoring and evaluation rather than jettisoning or altering them unduly frequently. The continuous infractions on the original   EPZ and   tariffs for the Motor Vehicle and Assembly sector should be quickly remedied to the development of the zones and motor vehicle assembly in the country.


Other recommendations include the following:


  • Sustain the Eligible Customer initiative to ensure that more electricity is supplied to the manufacturing sector;
  • Strengthen the Bank of Industry (BOI) and Bank of Agriculture (BOA) to adequately provide liberal finance for the manufacturing sector;
  • Monitor the implementation of Executive Order 003 to ensure compliance by MDAs so as to boost activities in the manufacturing sector;
  • Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies;
  • Rationalize Government Ministries, Departments, Agencies, parastatal and Commissions to resolve the issues of over-regulation and duplication; and
  • Improve the time taken to clear machines and raw-materials at the national ports while making the link road accessible


MCCI also measures changes in key macroeconomic indicators including sector specific factors that represent Government activities and policy measures in the economy. Consequently, the effects of movements in Foreign Exchange, Lending Rate, Credit to the manufacturing sector and Capital Expenditure of the Government were also measured.  In addition, it gauges the outcome of changes in business operating environment factors which include Over-regulation, Multiple taxes/levies, Access to seaports, Local raw-material sourcing, Government patronage of Nigerian manufactured goods and Inventory of unsold manufactured products.

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