The Manufacturers Association of Nigeria (MAN) is gearing up for what it predicts to be a challenging year for the country’s manufacturing sector in 2024.
Director-general of MAN, Segun Ajayi-Kadir, shared insights in an exclusive interview held in Lagos on Tuesday, revealing concerns about the initial half of the year but expressing optimism for a potential rebound by the third quarter.
The global manufacturing landscape has been grappling with macroeconomic variables, with a noticeable slowdown in growth rates observed in major economies such as China, the United States, South Africa, and Nigeria. Notably, Nigeria witnessed a substantial drop in its manufacturing growth rate, falling to 0.48% in Q3 2023 from 2.4% in 2021.
MAN’s projections for the manufacturing sector in 2024 include:
Policy Direction and Industrialisation: The association anticipates gaining clarity on the policy direction of the current administration, especially concerning efforts to deepen industrialization. Engaging with the government in this context is on the agenda.
Sectoral Growth: Despite cautious optimism, MAN foresees around 3.2 per cent real growth, with hopes that the manufacturing sector’s contribution to the economy could surpass 10 per cent. The Manufacturers’ CEOs Confidence Index is expected to climb above 55 points by the end of Q4 2023.
Capacity Utilisation: Foreign exchange fluctuations and high inflation rates are anticipated to impact manufacturing performance, with an estimated average capacity utilization hovering at 50%. However, a modest improvement is expected from Q3 2024.
Government Capital Provisions: Increased manufacturing output is on the horizon in Q3 2024 as the government channels capital provisions of the budget into various projects, showing a distinct preference for locally made products.
Infrastructure Upgrades: Ongoing concessions for seaports, airports, and roads are seen as potential opportunities for the cement sub-sector, contributing to infrastructure upgrades and boosting overall manufacturing productivity.
Oil and Gas Sector Impact: Positive developments in the global oil market, including an upward surge in prices, domestic oil and gas production, local refining of petroleum products, and gains from exchange rate unification, are expected to stabilize the foreign exchange market. This could positively impact the manufacturing sector from H2 2024.
Electricity Sector Reforms: Expectations include the dynamic implementation of the Electricity Act 2023, designed to encourage private investment in renewable energy, enhance energy efficiency, and improve electricity supply to the manufacturing sector.
Ajayi-Kadir acknowledged that 2024 might commence on a challenging note for the manufacturing sector but expressed hope for gradual improvements throughout the year. Envisaged policy reforms, a steadfast commitment to domestic production, and an overall positive outlook are seen as key factors favoring the sector’s potential rebound. The manufacturing sector remains a crucial component of Nigeria’s economic landscape, and stakeholders are closely watching developments as the year unfolds.
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