Looming Economic Crisis: M.A.N Raises Alarm Over High Level Insecurity, Rising Operating Cost

The Manufacturers Association of Nigeria (M.A.N) says the manufacturing sector in Nigeria is still severely distressed and its health very well in the outer edge and below the average performance level.

In its latest Manufacturers CEO’s Confidence Index (MCCI) report covering the first quarter of 2022  , the umbrella body of manufacturers in Nigeria noted that feedback 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 major challenges limiting the performance of the sector in the period under review.

The report shows that the first quarter 2022 MCCI index score of 53.9 points fell below that of the last quarter of 2021 which stood at 55.4, “the overall result shows that the economy recorded positive improvement despite unstable macroeconomic fundamentals, however, the manufacturing sector is still largely under severe pressure, its health very well in the fringes and below the desired performance threshold. On the overall, the score suggests fairly stable confidence in the economy driven primarily by improvement in current business condition.”

“Although the performance was affected by declining employment and production conditions arising from familiar supply-side constraints. The general decline in the index point and the dimmed outlook for the second quarter evidenced by expectations of lower production, employment and unfriendly business condition, is a cause for concern.

“This obviously calls for the crafting of a National Response and Sustainability Strategic Plan to avert the looming economic crisis and shortages that would arise from the impact of the Russia invasion of Ukraine.” The report noted.

Analysis of the Industrial 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 affected zones were 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 point’s threshold Index score.

“In broad terms, 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 report stated.

The manufacturer’s mouth promised to include its 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.

The report read “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.

“The ongoing invasion of Ukraine will continue to have negative spiral effects on every sector of the economy if not halted as soon as possible. The implication of allowing the invasion to continue for the manufacturing sector will include enormous decrease in capacity utilization (as factories begin to experience stock-out situations), inflation, dwindling sales, lower productivity, unemployment and heightened insecurity. Certainly, all of these would also have severe implications for economic and social wellbeing of over 200 million Nigerians.”

The MCCI of the Manufacturers Association of Nigeria is a quarterly research and advocacy publication that measure changes in pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macroeconomic and Government policies using primary data mined through direct survey on over 400 Chief Executive Officers of MAN member-Companies.

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), and 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.

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