Manufacturers’ confidence in the Nigerian economy for the first quarter of this year could drop further as a result of the tension surrounding the results of Saturday’s presidential election.
The latest aggregate Manufacturers CEO’s Confidence Index of the Manufacturers Association of Nigeria (MAN) declined to 55.0 points in the fourth quarter of last year from 55.4 points in the previous quarter.
“It is not difficult to see how the tension being generated will affect businesses. What I am most worried about, apart from the suffering that it portends for the average citizen, is the deepening of the drawbacks that our economy has suffered in recent times,” Segun Ajayi-Kadir, the director-general of MAN, told BusinessDay.
He said for instance, there has been an unprecedented decline in the confidence index of manufacturers’ CEOs in the last quarter. “So the tension threatens the escalation of this dim result.”
According to MAN, Q4 2022 was more difficult for manufacturers than the level of hardship in the preceding quarter due to persisting rise in the consumer price index, high cost of energy, unabated erosion in naira value, difficulty in sourcing foreign exchange and the harsh effect of Russia-Ukraine war.
“The decline in the aggregate score underscored the persisting challenges and the waning confidence of manufacturers in the economy in Q4,” Ajayi-Kadir said.
On Saturday, Nigerians went to the polls to elect a new president and members of the National Assembly.
Since then, tensions had been high across the country as Nigerians awaited the outcome of the hotly contested presidential election.
BusinessDay had reported on Monday that the anxiety surrounding the outcome of the elections had dampened business activities, especially in the informal sector.
Experts say this presents dire consequences for Africa’s biggest economy as businesses are already stretched financially due to the scarcity of naira notes and petrol.
“For now, nobody wants to go out and do business because of violence and insecurity,” said Abdulrasid Yarima, president and chairman of the governing council of the Nigerian Association of Small and Medium Enterprises.
He added that the petrol and naira shortages had yet to be fully resolved. “I just hope that immediately after they release the results, there will be peace and people can go back to their normal lives and businesses.”
Ajayi-Kadir of MAN said the expectation or the prayer of the business community is a credible election and a peaceful post-election atmosphere.
“A speedy dousing of the tension is capable of restoring the dwindling confidence of manufactures and would-be investors, attract the much-needed fresh domestic and foreign capital and boost the retention of foreign funds, which has been on the decline in recent times,” he said.
Read also: Stock market value hits N30trn despite post-election uncertainty
Africa’s most populous nation is being roiled by internal crises. Households and businesses are being whipsawed by a severe petrol scarcity that has lingered since November and a chronic shortage of cash occasioned by the naira redesign policy of the Central Bank of Nigeria (CBN).
The scarcity of naira notes has slowed down economic activities in the country. Manufacturers said they were already seeing a drastic reduction of more than 25 percent in sales of locally manufactured products.
“What should ordinarily be a welcome monetary policy to improve the CBN management of naira currency has become enmeshed in tardy implementation and needless disruption of businesses and everyday life of the people,” MAN said.
A recent report by the Nigerian Economic Summit Group said the cash scarcity would likely caused a slowdown in economic growth as many productive activities have been halted due to the inability to access cash.
“Furthermore, the uncertainty associated with this policy and its economic effects may contribute to volatile movements in macroeconomic variables,” it said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
