Shrinking Industrial Landscape: MAN decries Over Concentration Policy on Trade and Services to Manufacturing Sector

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Sectoral analysis shows that operations of manufacturing concerns in the Wood & Wood Products, Electrical & Electronics and Motor Vehicle & Miscellaneous Assembly groups were heavily challenged in the Q1 2022.


The Manufacturers Association of Nigeria comprised of over 400 Chief Executive Officers of MAN member-Companies said analysis based on Industrials zones shows that out of the 13 Industrial Zones in Nigeria, Bauchi/Benue/Plateau, Abuja and Rivers struggled in the First Quarter of 2022. The performance of the afore-mentioned zones was clearly depicted by the Index scores of 48.3, 44.8 and 46.0 points respectively, in the period under review which fell below the 50 neutral points threshold Index score.


In broad terms, according to the report  that the lackluster performance recorded in Bauchi/Benue/Plateau, Abuja and Rivers industrial zones is attributed to the unbridled disruption of manufacturing activities by high level insecurity, rising operating cost and the general manufacturing unfriendly environment. In specific terms, peculiar contributory factors for Rivers State include the prevailing low interest in the productive sector evidenced by shrinking industrial landscape, low support for the manufacturing sector and the overly concentration on trade and services.


The Manufacturers Association of Nigeria (MAN) via Manufacturers CEO’s Confidence Index (MCCI) which quarterly research and advocacy publication of the Association uses it measures changes in pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macroeconomy and Government policies using primary data mined through direct survey on over 400 Chief Executive Officers of MAN member-Companies.


According to the Preliminary Report & Highlights of Findings that contributory factors to the decline in the Index score for the First Quarter, 2022 include eroding disposable income of consumers, high interest rate, excessive drive for revenue by Government, obvious neglect of the economy for politics, the persistent acute shortage of  Forex; insecurity, the immediate impact of  the Russian Invasion of Ukraine as seen in the hike in price of Diesel, wheat and other imported manufacturing inputs

The report further noted that the standard diffusion factors deployed in the MCCI analytic 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 has a baseline index of 50 points that suggests a stationary point in the economy and affirms the level of confidence and performance in the quarter under review. Points above 50 points indicates that manufacturers have confidence in the economy and improvement in manufacturing performance, while any index point below 50 points indicate otherwise.


MAN pointed out that although the first quarter 2022 MCCI index score of 53.9 points fell below that of the last quarter 2021, the overall result shows that even though the economy recorded positive improvement despite unstable macroeconomic fundamentals, the manufacturing sector is still largely under severe pressure, its health very well in the fringes and below the desired performance threshold.

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In addition, the report further noted that feedbacks from manufacturers identified Limited supply of electricity; High cost of local  and imported raw-materials; Persisting  acute shortage of forex for importation of machine, raw materials not available locally and persisting insecurity in the country as the first our out of the challenges limiting the performance of the manufacturing sector in the period under review. As customary, MAN will include findings in the advocacy submissions to the Government backed with detailed recommendations on measures to address identified challenges inhibiting scale and competitive production in the sector.


Well, over 400 Chief Executive Officers of MAN member-Companies analysis shows that operations of manufacturing concerns in the Wood & Wood Products, Electrical & Electronics and Motor Vehicle & Miscellaneous Assembly groups were heavily challenged in the Q1 2022.


“Index Score of Wood & Wood Products sectoral (48.9 points); Electrical & Electronics (49.9 points); and Motor Vehicle & Miscellaneous Assembly (49.2 points) were all below the 50 base points. Affirming low confidence in the economy, poor performance and the struggling status of these manufacturing sectoral groups


Undoubtedly, the precarious situation that the manufacturing sector is currently in and the looming dangers ahead calls for a National Response and Sustainability Strategy to guarantee the survival of sector and avoid further de-industrialization, MAN added.

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