August 31, 2023

Manufacturers’ confidence slides further in Q2’23

Manufacturers’ confidence slides further in Q2’23

•Lament govt expenditure style

By Yinka Kolawole

More than 63 percent of manufacturers in Nigeria under the aegis of the Manufacturers Association of Nigeria (MAN) have said that capital expenditure by the government does not encourage productivity, even as the confidence of the sector’s chief executive officers (CEOs) in the economy sustained a downward trend in the second quarter of 2023 (Q2’23).

This formed the outcome of the Q2’23 MAN CEOs Confidence Index (MCCI) survey made available to Vanguard yesterday.

The result of the Q2’23 MCCI survey, which is conducted quarterly by MAN, shows the perceptions of manufacturers on developments in the macroeconomic environment.

The report stated: “About 63.1 percent of manufacturers enumerated disagreed that government capital expenditure encourages productivity in the manufacturing sector; 23.9 percent of those enumerated agreed, while about 13.1 percent were not sure.

MAN further noted in the report that aggregate index score of MCCI in Q2’23 declined by 1.4 points to 52.7 points from 54.1 points obtained in Q1’23, which is also 2.3 points less than 55.0 points recorded in Q4’22.

Also in the course of the survey, manufacturers had the opportunity to identify and rank the current challenges of the manufacturing sector in order of severity of impact.

Based on the ranking, high cost of energy was top on the list of major manufacturing challenges. This was followed by high cost of credit/inadequacy of loanable funds, multiple taxes/charges/levies/same tax policy for local producers and importers, unavailability of raw materials/delay in receiving imported raw materials/high cost of raw materials and scarcity of forex/high exchange rate/poor allocation of forex.

Reflecting on the outcome of the survey, Director General, MAN, Segun Ajayi-Kadir stated: “Government capital expenditure should address the issues of economic infrastructure such as roads, electricity, water, etc. that supports industrial sector businesses.

“The absence of economic infrastructure contributes significantly to the high cost of operating environment which obstructs the development of manufacturing in Nigeria.”

He added: Sequel to the above trends, it is highly expedient that the government strives to ensure the harmonization of fiscal and monetary policies that will pave the way for a stable macroeconomic environment needed to promote productivity in the manufacturing sector and improve the ease of doing business.”