Nigerian Manufacturing sector factory output value increased to N4.10 trillion in the first half of 2023.
This was contained in the half year review of the Economy by the Manufacturers Association of Nigeria (MAN).
It stated that the manufacturing sector factory output value rose to N4.10 trillion from N3.99 trillion recorded in the corresponding half of 2022, indicating 2.8 percent increase over the period. It also, increased by 52.8 percent when compared with N2.68 trillion recorded in the preceding half.
According to MAN, the 2.8 percent increase in the monetary value (not real output) of manufacturing sector production over the period of one year when inflation is at 24.08 percent at the same period indicates a struggling sector.
“The manufacturing sector faced myriad of challenges in the first half of 2023. The residual effect of naira redesign and the removal of fuel subsidy towards the end of the period under review triggers inflationary pressure, cost of transportation, cost of production and other macroeconomics imbalances, thereby worsened the purchasing power of the households.
“Key sectors like manufacturing and agriculture, which play a vital role in Nigeria’s economy, suffer as higher fuel costs drive up expenses related to machinery, irrigation, and transportation.
“These led to increase in the prices of food and other products, impacting both productivity and social stability. The uncertainty stemming from this policy change has undermined investor confidence, hampering both domestic and foreign investments that are crucial for economic growth and job creation,” MAN pointed out.
Meanwhile, capacity utilization in the manufacturing sector in the period under review, declined by 1.4 per cent year-on-year to 56.5 percent from 57.9 percent recorded in the corresponding half of 2022.
The director-general of MAN, Segun Ajayi-Kadir said that 2023 started with uncertainty in the economy as a result of Naira redesign policy of the Central Bank that led to naira crunch and the usual dormant economic activities prior to general election.
He noted that the re-infusion of the old currency notes which was initially moved out of circulation brought a promising outlook to the economy. Consequently, a short-lived uptick in economic activities, especially in the informal sector was experienced.
In restoring economy growth trajectory, Ajayi-Kadir stated that the government should engage in constructive dialogue with the stakeholders in the private sector; provide clear and consistent policies to provide certainty for businesses; conduct a comprehensive economic impact assessment of the fuel subsidy removal, exchange rate changes, and other policy measures; ensure effective implementation of the plans to support the manufacturing sector and MSMEs; infrastructure development; transparent and efficient implementation; regulatory reforms; among others.
He added that the government should prioritize forex intervention for raw materials and machinery for industries; improve forex allocation to the industrial sector; develop a roadmap for improved power supply, including off-grid solutions and private sector-driven independent power projects; resuscitate national refineries for local fuel production; review domestic gas pricing among others.
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