The Nigerian manufacturing sector in the third quarter of the year 2019, recorded its fastest growth so far in the year after it expanded 1.10 per cent against a negative growth of 0.13 per cent in the previous quarter.
This is evident in the recent National Bureau of Statistic (NBS) GDP numbers for Q3 2019 which recorded real GDP growth of 2.28 per cent, fastest in the year.
This is evident in the recent National Bureau of Statistic (NBS) GDP numbers for Q3 2019 which recorded real GDP growth of 2.28 per cent, fastest in the year.
An overview of the manufacturing sector revealed that GDP growth in the cement subsector quarter on quarter, grew 11 per cent at a constant price of GDP during the period. Also, its year on year growth stood at 6.87 per cent, outperforming the industry average of 0.42 per cent.
This suggests an increase in construction activities on the back of capital expenditure disbursement in Q3 2019.
According to a report by United Capital, “notably, growth in the manufacturing, and construction sector, that largely depends on government spending should receive a further boost in Q4 2019 amid the recent disbursement by the minister of finance for CAPEX.”
According to a report by United Capital, “notably, growth in the manufacturing, and construction sector, that largely depends on government spending should receive a further boost in Q4 2019 amid the recent disbursement by the minister of finance for CAPEX.”
However, some analysts believe that the recent policy of the CBN to increase loan to deposit ratio to 65 per cent in other to boost lending and spur growth in the real sector has rubbed off on the performance of the manufacturing sector of the economy.
“In our opinion, the recent policy by the Central Bank to improve lending and support growth in the real sector appears to be kicking in. The implementation of the loan-to-deposit ratio (LDR) guideline early enough in the quarter, compelled banks to lend to the real sectors and had a multiplier effect on output from both the real sectors and the financial & insurance sector and by extension aggregate economic output,” a report by CSL stockbrokers explained.
The sector which accounts for 9 per cent of the GDP as at Q3 2019 in real terms and 12 per cent in nominal terms is still threatened by the operating challenges in the Nigerian economy has businesses are largely affected by deficiencies in the infrastructural position of the country.
While we might be quick to celebrate the improvements recorded in the manufacturing sector after a decline that was recorded in the previous quarter, for a sector that has the potential to grow at 3.39 per cent in Q1 2018, an average growth of 0.59 per cent so far in 2019 shows the pitiable state of the Nigerian economy.
The manufacturing PMI in the month of October stood at 58.2 index points, indicating expansion in the manufacturing sector for the thirty-first consecutive month after a marginal decline in September 2019. Hence, the outlook for sustained growth in the sector is positive.
“In all, we believe the continued operating challenges in the economy and absence of the implementation of major policy reforms thus far during the quarter, would keep growth at sub-optimal levels (below population growth rate),” report from United capital stated.
