Despite challenges, pharmaceuticals, cement, FBT, drive manufacturing growth in third quarter
Activities in Nigeria’s pharmaceutical sector, cement sector, Food, Beverage, and Tobacco (FBT) industries helped drive growth in the manufacturing sector for the third quarter of 2021, which it has consistently done since the second quarter of 2020 when the pandemic struck.
According to the quarterly Gross Domestic Product report published by the National Bureau of Statistics, the manufacturing sector recorded 4.29 percent growth from July to September 2021 moving from the 3.49 percent achieved between May and June (second quarter) and significantly jumping from the -1.51 percent recorded in the third quarter of 2020.
The improvement recorded was driven majorly by the three aforementioned subsectors out of the 13 subsectors in manufacturing. The chemical and pharmaceuticals topped the chart with 10.02 percent from 9.24 percent in Q2, while the FBT followed with 6.07 percent from 4.87 percent and cement with 5.68 percent from 3.89 percent.
“The three subsectors have become more essential following the outbreak of the pandemic as individuals try to maintain a healthy lifestyle using medication and food, furthermore, a lot of projects are ongoing such as the building of houses, critical infrastructure among other things,” Jide Babatope, Lagos-based analyst said.
He added that going forward, the sector’s performance should get better especially as the yuletide season nears, however, this does not eliminate the challenges in the sector particularly FOREX scarcity, supply cut, rising production cost, among many others which affect manufacturers.
A report by FBN Quest affirmed the three subsectors as highflyers, noting that the cement subsector is also projected to continue growing as funds are pumped into capital projects in the course of the year while its main inputs are available locally.
Following the top three performers were the motor vehicles and assembly subsector with 4.97 percent, non-metallic products with 3.91 percent, and plastic & rubber products with 3.79 percent growth, while oil refining recorded the heaviest shrinkage of -47.83 percent.
Following the recorded growth, the sector contributed 8.96 percent to the total GDP which recorded an improvement from the 8.69 recorded in Q2 and the 8.93 percent in Q3 2020.
Vincent Nwani, economist and investment consultant told BusinessDay that although the sector is showing signs of recovery, the government still needs to take prompt action in order to prevent the sector from relapsing.
“The sector is in dire need of policy and project reforms across its sub-sectors, vulnerable sub-sectors in the manufacturing space should be provided funds at low cost to sustain operations and encourage CAPEX spending. In addition, solving the FX challenges faced by these manufacturers would be an important factor to kick-start growth,” Nwani said.