The Manufacturers Association of Nigeria (MAN) says escalation in 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 adversely affected manufacturing activities and the nation’s economy in the fourth quarter of 2022.
In its latest Manufacturers CEO’s Confidence Index (MCCI), MAN noted the aforementioned headwinds among others issues were mainly responsible for the difficult operating environment and its declining implication on manufacturing activities in the country during the quarter under review.
The MCCI of MAN is a quarterly research and advocacy publication of the Association, which measures 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 generated from direct survey of over 400 Chief Executive Officers of MAN member-Companies.
The Index has a baseline score of 50 points and scores above the baseline indicate improvement of manufacturers’ confidence in the economy, while index score of less than the baseline suggests deterioration in the operating environment.
According to MAN, in the fourth quarter of 2022, the Aggregate Index Score (AIDS of MCCI declined to 55.0 points down from 55.4 points recorded in the third quarter of the year.
Thje report read in part, “The decline in the Aggregate Index Score underscored the persisting challenges and the waning confidence of manufacturers in the economy in the fourth quarter of 2022 over the recorded points in the preceding quarter.
“The index score of the current quarter though below that of the previous quarter, indicates that manufacturers generally still have confidence in the economy.
“Current Employment Condition (Rate of Employment) and Production level in the next three months scored above the 50 benchmark points though with a decline in the period respectively;
“Employment Condition for the next three months dipped below the benchmark points to 48.8 points which is also below 49.2 points obtained in the preceding quarter.
“In summation, the fourth quarter of 2022 appeared to be more difficult to manufacturers than the level of hardship in the preceding quarter due to persisting rise in CPI, high cost of energy, unabated erosion in Naira value and difficulty in sourcing forex including the harsh effect of Russian-Ukrainian war.”
“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 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 Cross-Rivers/Akwa-Ibom (46.5 points) zones were depressed by high-cost of 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 to reduce the current high inflation, which is fast eating-up the working capitals of businesses including manufacturing in the economy.