•As costs rise 24%, capacity utilization down 5%

By Yinka Kolawole                                                

The confidence of Nigerian manufacturers in the nation’s economy has continued to decline amidst persistent harsh operating environment, a survey of CEOs of manufacturing companies has revealed.

The Manufacturers Association of Nigeria (MAN) conducts a survey on MAN CEOs Confidence Index (MCCI) quarterly to measure changes in pulse of manufacturing activities in relation to the macroeconomic situations and government policies.

MCCI is the weighted average of the  observed and expected changes in business conditions, employment and production level in the economy based on the perceptions of manufacturers in the quarter under review.

The result of the MCCI first quarter 2023 (Q1’23) survey shows that the aggregate index score of MCCI declined to 54.1 points in Q1’23 which is 0.9 points less than 55.0 points recorded in the fourth quarter of 2022 (Q4’22).

The survey further showed that Production and Distribution costs escalated by 24% in Q1’23 much higher than the 19% increase witnessed in the preceding quarter; Capacity utilization nosedived further by 5% similar to the contraction witnessed in the preceding quarter; and Volume of production contracted by 13% against the 1% growth recorded in the previous quarter.

Commenting on the report, Director General, MAN, Segun Ajayi-Kadir, called on the new administration of President Bola Tinubu to prioritise tackling the challenges confronting the manufacturing sector

His words: “A critical evaluation of the analysis provides an inference that the performance in the first quarter of 2023 was much lower than what was obtained in the last quarter of 2022. Major performance indicators of the manufacturing sector all recorded unfavorable changes.

“Amidst the harsh business-operating environment evidenced by poor macroeconomic indices, the underperformance was largely driven by the nationwide cash crunch in the first quarter of the year.  The economic turmoil significantly crushed consumer patronage and disrupted the manufacturing value chain in most periods of the quarter.” 

He further stated: “Although the quarter recorded marginal contraction, the performance indicates that manufacturers maintained their confidence in the economy since the index remains above the 50-point benchmark. 

“Nonetheless, marginal contraction in index score portends that the untoward hardship meted on the manufacturers is growing overwhelmingly and diminishing the resilience of the sector. Therefore, tackling the challenges of the manufacturing sector must be at the front burner of the new administration.”