Manufacturing expansion continues on back of policy shift

Manufacturing expansion, which started three months ago, continued in June due to policy changes in the foreign exchange market and the ease of doing business.

The Central Bank of Nigeria (CBN) on Friday, released the Purchasing Managers Index (PMI) which stood at 52.9 index points in June 2017, indicating expansion in the manufacturing sector for the third consecutive month.

The current PMI is 0.4 index point higher than the level of 52.5 index point in the preceding month.

“There is a gradual improvement in the sector. It is essentially the changes made in foreign exchange. It is still early to evaluate the budget passed but I think the ease of doing business is slightly better now,” said Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN) in a telephone interview with BusinessDay.

The Federal Government established the Presidential Enabling Business Environment Council (PEBEC) in July 2016. Similarly, the Federal Government recently gave executive orders to remove gridlocks to ease of doing business at ports and patronise 40 percent of locally made goods in government procurement.

The government, in April approved the Industrial Policy and Competitiveness Advisory Council to stimulate the growth of industries.

“We are confident that the sustenance and efficient implementation of these laudable policies and guidelines would trigger superlative economic performance within the remaining quarters of the year, and usher the economy into a refreshing season of positive growth and full recovery,” said MAN, in its First Quarter 2017 Economic Report.

The PMI report shows new orders, employment and raw materials inventories growing at a faster rate; Production level growing at a slower rate; and supplier delivery time growing from contraction.

Twelve of the 16 sub-sectors reported growth in the review month. They include computer and electronic products; paper products; plastics and rubber products; primary metal; transportation equipment; petroleum and coal products; appliances and components; textile, apparel, leather and footwear; furniture and related products; electrical equipment; food, beverage and tobacco products and fabricated metal products.

The remaining four sub-sectors declined in the order: non-metallic mineral products; cement; chemical and pharmaceutical products and printing and related support activities.

According to the report, the production level index for manufacturing sector grew for the fourth consecutive month in June 2017. The index at 58.2 points, indicated an increase in production but at a slower rate, when compared to the level attained in the previous month.

The report showed that fourteen manufacturing sub-sectors recorded increase in production level during the review month in the following order: computer and electronic products; plastics and rubber products; transportation equipment; primary metal; appliances and components; paper products; textile, apparel, leather and footwear; electrical equipment; petroleum and coal products; fabricated metal products; furniture and related products; food, beverage and tobacco products; cement and printing and related support activities. The non-metallic mineral products and chemical and pharmaceutical products sub-sectors, recorded decline in production.

De-United Foods has continued to expand backward integration projects and source over 90 percent of palm oil, maize and other inputs locally.

PZ Wilmar continues to pump $300 million into its  backward integration projects in Cross River State, according to its CEO, Christos Giannopoulos.

Dangote Group refuses to be daunted as it pumps over $2 billion into the sugar industry.  Flour Mills of Nigeria, through its sugar subsidiary, known as Golden Sugar Estate Limited, is investing $300 million in sugar production at Sunti, Niger State.

FrieslandCampina WAMCO, producer of Peak Milk and Crown Milk, currently has four locations in Oyo State, where it houses and supports local herdsmen who provide milk from local cows. In 2015, the dairy maker engaged and trained over 920 women and 726 men Fulani milk producers and potential small-holder dairy farmers in Oyo State.

 

ODINAKA ANUDU & HOPE MOSES-ASHIKE