By Yinka Kolawole
The production output of Nigeria’s Manufacturers fell by 9.7 percent to N6.67 trillion in 2022 from N7.39 trillion in 2021 on account of forex scarcity, high inflation, high cost of energy and limited household purchases.
Director General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, disclosed this as part of the findings of MAN’s survey of the manufacturing sector for the second half of 2022 (H2 2022).
The MAN DG also disclosed that increased difficulty in sourcing foreign exchange (forex) compelled the manufacturers to embrace the use of expensively sourced local raw materials for their operations in 2022, adding that this pushed up average local raw materials utilisation to 52.8 percent in the period compared to 51.5 percent recorded in the preceding year.
Ajayi-Kadir stated: “Manufacturing sector factory output value declined to N2.68 trillion in the second half of 2022 (H1’2022) from N3.73 trillion recorded in the corresponding half of 2021 (H2’2022), thus, indicating N1.05 trillion or 28 percent declined over the period. It also declined N1.31 trillion or 32 percent when compared with N3.99 trillion recorded in the preceding half (H1’2022).
“The value of manufacturing production totaled N6.67 trillion in 2022 as against N7.39 trillion recorded in 2021. Manufacturing production was severely affected in the second half of 2022 by absence of implementation of new capital projects by the government as they focused on the election. Production in the sector was also negatively affected by limited purchases by households due to the Naira redesign policy, the high inflationary pressure in the country, high cost of energy, particularly diesel and gas, acute shortage of forex for importation of raw materials and machinery needs of the sector that are not locally manufactured in the time being and many more.”
In a bid to ensure that the nation’s manufacturing sector remains competitive, Ajayi-Kadir said it is expedient for the government to direct more funding towards backward integration development in the country.
His words: “Local raw materials utilisation in the sector averaged 52.8 percent in 2022 as against 51.5 percent recorded in 2021.
“The increase in the local raw materials utilization in the sector during the period is due to increased difficulty in sourcing forex which compelled manufacturers to look more inward for raw materials notwithstanding the associated huge cost. “It is therefore important for the government to re-evaluate its role in local development and production of raw materials in terms of funding.”
Source: Vanguard
