Manufacturers confidence in Africa’s most populous nation has dipped by 1.7 points in the third quarter of 2024 amid worsening macroeconomic headwinds, according to data from the Manufacturers Association of Nigeria (MAN).
The aggregate Manufacturers CEOs Confidence Index (MCCI) of MAN declined by 1.7 points to 50.2 points in the third quarter from 51.9 points in the preceding quarter of 2024.
According to MAN’s Q3 report, all current indices recorded a decline and stood below the 50-point standard due to the harsh business-operating environment occasioned by high energy prices, exorbitant exchange rates, soaring interest rates, persistent inflation, and unstable fuel supply.
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Reading above 50 points indicates the expectation for economic expansion, while an index score of less than 50 suggests deterioration in the operating environment.
“A cursory observation also shows that all indices projected for the fourth quarter recorded decline. However, each forecast remains above the 50-point benchmark.
“This suggests that while there is a downturn in the projected confidence levels, business optimism for the fourth quarter is moderate, due to the festive activities scheduled for the end of the year,” MAN said in the report.
Across the sectoral groups, the reports showed that five of the ten groups recorded confidence levels below the 50-point benchmark when compared to the second quarter in 2024.
They include; Domestic/Industrial Plastic and Rubber (48 points), Food Beverage and Tobacco (47.5 points), Motor Vehicle and Misc. Assembly (44 points), Textile, Apparel and Footwear (44 points), Wood and Wood Products (48 points).
It added that the confidence levels of operators within these sectoral groups were heavily dampened by inflationary pressure, increase in imported products, low Government patronage, and high cost of raw materials.
In industrial zones, only manufacturers operating in Apapa, Ikeja, Imo/Abia, Oyo/Ondo/Osun/Ekiti, and Rivers/Bayelsa exhibited a high level of resilience despite the hostile business environment during the reviewed period.
MAN recognised CBN’s efforts in curbing inflation and stabilising he naira, however, the association noted that the prevailing macroeconomic headwinds clearly prove that the monetary instruments offer limited scope when confronting the broader economic challenges.
The association urged policy makers to step up their games by tackling the root causes of the economic quagmire rather than addressing symptoms.
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“Therefore, the fiscal authority must chart a new course in collaboration with the monetary authority to expedite the much-needed structural reforms in a highly coordinated approach,” it recommended.
“The achievement of a double-digit growth and a friendly macroeconomic environment will require a shift in policy focus. Monetary policy must be supported by a robust fiscal framework and comprehensive structural reforms,” it said.
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