•Manufacturers expect tough start, improved ending – MAN

•Bleak outlook for small businesses – ASBON

•Headwinds, shocks to lessen in coming year – CPPE

•Economic agents to strategize on mitigating inflationary pressures – LCCI

By Yinka Kolawole

The organised private sector (OPS) has projected a mixed economic outlook for 2024.  

Speaking to  Vanguard, the Association of Small Business Owners of Nigeria (ASBON) predicted a bleak outlook for the coming year, the Manufacturers Association of Nigeria (MAN) said that  2024 will  start on a tough note for the sector but end with some measured improvements.  

On its part, the Centre for the Promotion of Private Enterprise (CPPE) believes that the economic headwinds and shocks experienced in 2023 will lessen in 2024.

MAN

Commenting, Director General, MAN, Segun Ajayi-Kadir, noted that the trajectory of manufacturing globally portrays a struggling sector that is now more than ever challenged by key macroeconomic variables and externalities, leading to dwindling growth.

His words: “The outlook for the Nigerian manufacturing sector in 2024 may not be a positive one, at least in the first half of the year. The period will be challenging, with a subtle possibility of recovery from the third quarter.  

“The envisaged recovery is highly dependent on the deployment of policy stimulus supported with a synthesis of domestic growth driven, export focused and offensive trade strategies. This will promote resilience, steady growth and ensure that the sector gains meaningful traction in the later part of the year.  

“In 2024, sectoral real growth is expected to hit about 3.2 percent; contribution to the economy will most likely exceed 10 percent and the Manufacturers’ CEOs Confidence Index is predicted to rise above 55 points thresholds by the end of Q4 2023.

“Average capacity utilization will still hover around the 50 percent threshold as the forex-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.

“Higher manufacturing output is envisaged from the beginning of the third quarter of the year as the government disburses capital provisions of the budget to abandoned, ongoing and new capital projects with expected special preference for locally made products.

“In broad terms, the year 2024 may start on a tough note for manufacturing but may end with some measured improvements because the envisaged policy reforms, improved commitment to domestic production and general positive outlook seem favourable for the sector.”

ASBON    

Also commenting, President, ASBON, Dr Femi Egbesola, stated: “The outlook for small business is bleak and very uncertain. About 20% of small businesses closed shop in 2023 and the causative factors have not been addressed. Rather, it keeps worsening.

There hasn’t been any major policy change. High inflation, forex imbalance, naira scarcity, multiple taxation, high cost of power, infrastructure deficit, dearth of access to finance, to name just a few, is getting from bad to worse with no hope in sight.  

Small businesses are in a pitiable condition and I guess the government needs to declare a state of emergency in the sector. If not, many more will close down next year and it will definitely have a very negative impact on our economy and the people.

In order to improve performance of the MSME sector, Egbesola said the government should pay more than the usual attention on the sector.  

He stated: “A number of economic policies needs to be reviewed, revised or removed.  

“For the government to formulate workable policies, stakeholders in the sector must be engaged from inception to co-create and co-own policies related to SMEs. More access to funding and intervention funds should be opened up by the government.  

“Government, as the major spender, should start to heavily patronise  Made-in-Nigeria goods and services rather than patronising imported products.  

“Power is a common denominator to business owners. Hence, power needs to be made available, constant, accessible and affordable to SMEs as this will significantly reduce the cost of doing business. “Taxes should be harmonized and made transparent and corrupt free. Foreign exchange should be stabilized and made available in the legal market.

  

“Export and agriculture should be heavily supported.  

“SME related agencies such as NAFDAC, SON, CAC, FIIRO, RMRDC, etc, should be strengthened to play more in the regulatory and support system rather than revenue generating agencies.”

CPPE

In his reaction, Director, CPPE, Dr. Muda Yusuf, stated: “The economic headwinds and shocks of 2024 would not be as severe as what was experienced in 2023.

“The efforts of the CBN in clearing the forex mature obligations, the removal of policy barriers to forex inflows and the import substitution effects of domestic refining of petroleum products would have a considerable impact on the economic outlook for 2024.  

“The efforts of the government to curb the menace of oil theft and boost crude oil output would positively impact on the outlook for foreign reserves and the stability of the exchange rate. 

 

“Already the fiscal space is getting better following the revenue effects of the fuel subsidy removal and the steps towards exchange rate convergence.  

“However, the challenge of insecurity, crude oil theft, rising recurrent expenditure and the social outcomes of economic reforms are potential risks to the outlook.

“The biggest challenge to our manufacturing sector is the huge exposure to the external sector, specifically imported raw materials.    

The sector’s outlook will depend to a large extent on the stability of the foreign exchange market and the related forex liquidity.  

“However, to the extent that the CBN had demonstrated a clear commitment to the stabilisation of the foreign exchange market, the manufacturing sector outlook may be more on the upside in 2024.

“The rising prospects of heightened domestic petroleum refining activities would impact positively on backward integration outcomes for the manufacturing sector. The expected increase in domestic petrochemical output will hopefully ease the pressure of importation of raw materials by manufacturers.”

Economic agents to strategize on mitigating inflationary pressures – LCCI

The Lagos Chamber of Commerce and Industry (LCCI) said that economic agents are expected to continue to deploy strategies that will mitigate inflationary pressures in 2024.  

Director General, LCCI, Dr. Chinyere Almona, in a statement, noted that the continued uptick in inflation and offers investment disincentives to businesses.

Her words: “LCCI is concerned about the continued uptick in inflation and particularly notes that it offers investment disincentives to businesses, squeezes consumers’ income and spending, and constrains manufacturing productivity in the country. 

“We anticipate economic agents, including households and businesses, to continue to deploy strategies that will mitigate inflationary pressures.  

“CBN is responsible for formulating and implementing monetary policies that foster currency stability. This involves a delicate balance between managing inflation, ensuring a competitive exchange rate, and promoting economic growth. 

“Therefore, the CBN needs to adopt a well-calibrated policy mix that addresses the unique challenges facing the Nigerian economy.

“By promoting economic diversification, implementing effective interest rate policies, managing the exchange rate judiciously, and embracing inflation targeting, the CBN can contribute significantly to ensuring the stability of the Naira and fostering a robust and resilient economy.

“Further, we implore the government to address the challenges inhibiting domestic production and ease the bottlenecks to the distribution of goods within the country.”