•Lists poor forex supply as top sector challenge
By Yinka Kolawole
The Manufacturers Association of Nigeria (MAN) said that manufacturing operations went up to pre-COVID-19 level in the second quarter of 2021 (Q2’21), noting, however, that access to foreign exchange has remained the number one challenge for operators in during the period.
This was contained in MAN’s Manufacturers CEOs Confidence Index (MCCI) report for Q2’21, made available to Vanguard yesterday.
MCCI is an index created by MAN to gauge the change in quarterly pulsation of manufacturing activities to changes in the macroeconomic ambience and government policies. It is a barometer used by MAN to garner the perceptions of CEOs of manufacturing companies on changes in the economy.
MCCI has a baseline index of 50 points which suggests a stationary point in the economy. Any index point above 50 points indicates that manufacturers have confidence in the economy and improvement in manufacturing performance, while any index point below 50 points indicates otherwise. Specifically, MAN stated: “The performance of the economy in the second quarter of 2021 consolidated on the achievement made in the first quarter (Q1’21) after a very difficult period accessioned by the onslaught of COVID-19 pandemic. “In the quarter under review, businesses activities appeared to have further stabilized.
“Consequently, even though the macroeconomic variables (exchange rate, lending rate and inflation rate) are still very much unfavourable, businesses are able to maintain operation, particularly at the level it was in 2019 before COVID-19 came in 2020.
“On account of the improved economic tranquility, Aggregate MCCI increased to 52.9 points in the Second quarter of 2021 from 49.1 points recorded in the first quarter of the year. That was the first time the index value reach and exceeded the 50 neutral points since the Q1’20 when it recorded 44.4 points, thus, suggesting that the macroeconomic ambience improved in the second quarter of 2021.
“By implication, the performance shows an improvement in the confidence of manufacturers in the economy.”
The MAN, however, added, “Myriads of manufacturing challenges were identified during the second quarter MCCI survey. However, poor access to foreign exchange for importation raw materials and machines that are unavailable locally ranked first among the challenges.”
MAN noted that the new CBN policy that stopped allocation of forex to the BDC segment of the forex market for operational incongruities further increased the responsibilities of commercial banks in handling forex sales and applications in the economy.
As a way out, MAN said: “It is therefore important to encourage the banks to build more capacities through designate desks for handling the streaming applications and Form M to ensure seamless and timely processing of forex application by manufacturers; Granting concessional forex allocation at the official forex market to manufacturers for importation of productive inputs that are not locally available;
Unify the various forex windows in the country; and Allocate all available forex productively.”