Nigeria’s manufacturing sector had a turbulent year in 2020, with unprecedented disruptions owing to the Coronavirus (COVID-19) pandemic and other inherent challenges, which significantly affected the performance of the sector. While key players across the country took a beating from sourcing raw materials to logistics and distributions, they see a light at the end of the tunnel in 2021 and are hoping for a better year.
Before the pandemic, the GDP report released by the National Bureau of Statistics (NBS) in the first quarter of 2020 showed activities in the manufacturing sector recorded a performance of 0.43percent, which experts tied to the slow resumption of activities following the New Year. However, in the second quarter of the year during the heat of the COVID-19 pandemic, which disrupted economic activities, the sector contracted to 8.78 percent signifying the struggle many manufacturers encountered during the period. Following the gradual resumption of activities in the third quarter, the sector performed better but could not avoid a recession as it contracted again by 1.51 percent, performing poorly in comparison with 2019.
Giving an outlook for 2021, Frank Onyebu, chairman, Manufacturers Association of Nigeria (MAN), Apapa branch, said that 2020 was a tough year for the sector but the resilience of its players will ensure a quick recovery this year with inputs from the government.
“We expect that the sector will improve significantly provided that the government addresses promptly all the challenges we are facing and also hope that we can fight the second wave of the virus before it results into another lockdown which will disrupt economic activities,” he said.
The Lagos Chamber of Commerce and Industry (LCCI), in its economic outlook for the year 2021 stated that prior to 2020, the manufacturing sector was already struggling with FX scarcity, weak consumer demand, escalated cost of production, perennial bottlenecks at the ports, regulatory uncertainties, and poor trade infrastructure. While these existed before the COVID-19 disruption, it worsened the situation for manufacturers, however the chamber expects that activities would improve in 2021.
“The reopening of the land borders should provide succour to the manufacturing sector even as the kick-off of AfCFTA serves as an avenue for manufacturers to penetrate new African markets. However, if not properly addressed, the inherent challenges will dampen the recovery prospects of the sector in 2021,
We expect the CBN to sustain its intervention efforts in the manufacturing sector as part of measures to boost economic recovery and we also see the CBN maintaining policies that supports credit extension to the real economy.” the report stated.
Similarly, Anthony Ajulo, executive director, Colton Group of companies, in a telephone conversation with BusinessDay said although the past year was tough for business environment, his company managed to stay afloat. Nevertheless, they were not able to achieve all they planned at the beginning of the year, identifying forex scarcity, impact of the pandemic, and challenges at the port, which caused a lot of drawbacks. He also remained optimistic about the New Year (2021).
“We expect that 2021 will be much better than 2020 and we are already seeing more opportunities of expansion with the commencement of the African Continental Free Trade Area and the gradual reopening of the border,” Ajulo said.