Chief executive officers (CEOs) of manufacturing companies have highlighted foreign exchange access, poor sales and over regulation as challenges facing their firms, as the novel coronavirus (COVID-19) continues to wreak havoc across the world.
In the Manufacturers CEOs Confidence Index (MCCI) conducted by the Manufacturers Association of Nigeria (MAN) in the first quarter of 2020, CEOs say forex sourcing and accessibility have not improved from the last quarter, rather it has worsened due to drop in oil prices and the pandemic.
According to the survey, CEOs confirm that it was pretty difficult to source forex from all the available windows.
Forty-three percent of the CEOs say the level of unsold manufactured products has not reduced in the last three months while 31 percent says the Executive Order 003, which mandates the patronage of locally produced goods by government agencies, has not been fully adhered to.
Furthermore, the CEOs complain that the raw materials and production equipment have been scarce, especially as China, which is the major hub where these things are sourced, closed down its economy to arrest the pandemic.
“The unavailability of forex negatively impacted manufacturing performance, as manufacturers could not access forex required to import vital raw materials, machines and spares that are not available locally. All of these in turn hindered the ability of operators to produce efficiently at full capacity,” the report states.
The index is a quarterly instrument for measuring changes in macroeconomic trends.
In the first quarter of 2020, the MCCI stood at 44.4 percent, which is a five-point drop from the benchmark of 50 percent, and also a drop from the 51.9 percent recorded in the fourth quarter of 2019.
Manufacturers in Nigeria have consistently battled various challenges prior to the breakout of the pandemic and have now been left worse as they lack the necessary buffers and palliatives to cushion the impact of the COVID-19. Consequentially, their businesses are bearing the brunt of it.
As a recommendation, MAN says, “To effectively reduce the inventory of unsold items Government should initiate policies that will strengthen the purchasing power of consumers to stimulate aggregate demand and deliberately support industries to reduce the production cost of manufactured products in the country, while a lot still needs to be done to ensure that MDAs comply in order to galvanize industrial productivity through deliberate public spending.”
Since the outbreak of the pandemic, the global business environment and economy has experienced decline and occurrences ranging from supply cut to a huge drop in oil prices, movement restriction, among others, which significantly hurt economic growth and development.
In addition to this, the health, political and social areas have been pressurised as well resulting to a halt in many activities
