Nigeria’s manufacturing showed some glimpses of hope in the second half (H2) of 2014 as capacity utilisation in the sector hits 54.2 percent.
This represents a 2.25 percent rise from 51.95 percent capacity recorded in the first half (H1) of the year. This was also a 1.5 percent increase when compared with the capacity utilisation in the corresponding period of 2013 (second half of 2013).
“The performance in the second half of the year, notwithstanding the economic challenges that sprouted in the third quarter and policy actions that followed, was due largely to manufacturers’ investment and production commitments prior to the distortion in the economy by the challenges,” says the Manufacturers Association of Nigeria (MAN), in a July-December 2014 Economic Review, released to BusinessDay.
Capacity utilisation measures the rate at which potential output levels are being met or used. High or rising capacity utilisation implies that manufacturers are closing up the gap between actual output and potential output.
In spite of the overall positive performance of the manufacturing sector in this area, some sub-sectors got some beating, reporting relatively lower capacity utilisation levels.
The food, beverage and tobacco sub-sector leads the pack with capacity utilisation falling from 53.3 percent in the first half of 2014 to 52.41 percent in the second half of the same year.
This sub-sector has got some pounding in the last two halves, when compared with 61.5 percent capacity recorded in the second half of 2013.
Also on the list of ‘poor showers’ is the pulp, paper, printing and publishing sub-sector which recorded a slide in capacity from 60.5 percent in the first half of 2014 to 53.13 percent in the second half of the same year.
The fortunes of the chemical and pharmaceutical sub-sector nosedived in the second half of 2014 as capacity fell from 49 percent (obtained in the first half) to 43.88 percent. The performance of the first half of the year was relatively lower than 53.6 percent recorded in the second half of 2013.
Also, capacity in the electrical/ electronics, which earlier rose from 38.6 percent (in the second half of 2013) to 50.4 percent (in the first half of 2014), fell to 48.3 percent within the period under review.
The metal, iron and steel sub-sector’s fortunes have been on the slide, reporting 52.3 percent capacity in the second half of 2013, 49.9 percent in the first half of 2014, and 46.44 percent in the last half of 2014.
According to MAN, the crash in capacity in many sectoral groups within the second half of 2014 may be attributed to inadequate power supply to industries even after the completion of the privatisation process, as well as difficulty in sourcing foreign exchange for raw materials import, owing to naira devaluation arising from lower earnings from crude oil.
However, other sectoral groups turned in impressive performances. The textile, apparel and footwear group recorded 56.18 percent capacity in the period under review, as against 43.5 percent in the first half of 2014 and 44.9 percent in the corresponding period of 2013.
Several consultations were held to revive the textile industry in 2014. The National Cotton, Textile and Garment policy document was adopted within the year as part of efforts to resuscitate the sub-sector.
Similarly, the wood and wood products sub-sector’s capacity rose to 63.64 percent within the period, as against 61 percent obtained in the first half of 2014 and 44.4 percent in the same period of 2013.
The non-metallic products group, made up of cement, glass, chalk and ceramics, had its capacity shot up to 71.03 percent, as against 49.2 percent in the first half of 2014 and 69.9 percent in the same period of 2013.
“The cement industry contributed greatly to the high capacity utilisation in the sub-sector,” says MAN, in the review.
The Automobile Industry Policy had positive impact on the motor vehicle and miscellaneous assembly as capacity rose to 51.6 percent within the period, as against 50.3 percent in the first half of 2014 and 42.7 percent in the corresponding period of 2013.
The domestic/industrial plastic and rubber’s capacity rose to 55.81 percent, from 52.4 percent in the first half of 2014 and 59.5 percent in the second half of 2013.
ODINAKA ANUDU
