The Manufacturers Association of Nigeria MAN designed a measured called Manufacturers Confidence Index (MCCI) Manufacturing activities in the fourth quarter of 2022 was adversely affected by escalation in the Consumer Price Index (CPI), continuous erosion in Naira value and difficulty in accessing forex, high cost of energy, persisting insecurity and the consequences of lingering Russian-Ukrainian war. These issues among others are principally responsible for the difficult operating environment, which have led to the declining performance of the manufacturing sector in the quarter under review.
In the statement sent to The Ameh News (TAN) contained the fourth quarter of 2022’s report, shows Aggregate Index Score (AIS) of MCCI declined to 55.0 points down from 55.4 points recorded in the third quarter of the year. The index score of the current quarter though below that of the previous quarter, indicates that manufacturers generally still have confidence in the economy.
According to MAN, Across Sectoral groups, however, activities in the Pulp, Paper, Printing & Publishing with index score of 49.6 points and Motor Vehicle & Miscellaneous Assembly (48.4 points) are negatively affected by the challenge harsh operating environment in the quarter under review as their index scores fell below the 50 base points.
Similarly, among industrial zones, activities in Rivers/Bayelsa (48.0 points) and Criss-Rivers/Akwa-Ibom (46.5 points) zones were depressed by the high cost operating environment in the fourth quarter of 2022 as underlined by their index scores which fell below the
benchmark points.
Consequent upon the above trends, it is crucially important for the Government to have a shift towards a better exchange rate management; and moderate the rising energy cost via better management of refined petroleum products imported into the country. These among other measures would no doubt help reduce the current high inflation, which is fast eating-up the working capitals of businesses including manufacturing in the economy.
Based on the analysis of the impact of macroeconomic environment on the manufacturing sector indicators, it instructive to claim that the fourth quarter of 2022 was almost as challenging as third quarter safe minor improvement.
Although indicators such volume of production, investment, employment and cost of shipping improved in the quarter, the decline in capacity utilization is a pointer to the severity of the operating environment on manufacturing activities in the fourth quarter of the year
MAN therefore, stated that the Index Score (IS) of fourth quarter of 2022 which came up 55.0 points which is 0.4 points less than 55.4 points recorded in the third quarter of the year. The report further noted, although the quarter recorded marginal change in IS, the performance indicates that manufacturers maintained their confidence in the economy. They are able to continue to navigate the harsh operating environment in the quarter to sustain production. However, the decline in the IS in the quarter is also a presage that operation in the sector is losing momentum in the face of the almost innumerable challenges.
It is therefore critically important that the identified current challenges of the sector by manufacturers themselves should be quickly taken up by the Government with priority attention. The issues of acute shortage of forex, high cost of raw materials, inadequate power supply, multiple taxes/levies, etc., should be addressed to so as not allow for further degermation in the activities of the sector.
