Member-companies of the Manufacturers Association of Nigeria (MAN) such as Dangote Group, Olam, Guinness Nigeria and Fidson Healthcare, among others, have pumped N238.45 billion into the Nigerian economy in six months, according to the association’s latest data.
The figure represents investments made by over 2,000 members of MAN in the first half of 2019.
However, the N238.45 billion reflects a N67.11 billion or 21.9 percent decline from N305.56 billion recorded in the corresponding half of 2018.
“Manufacturing investment in the period was affected by late passage of 2019 budget which affected capital expenditure implementation, poor economic support infrastructure, over regulation and high cost of capital in the economy,” MAN said in the economic review.
When compared with the second half of 2018, the number then represents 3.5 percent decline from N247.08 billion recorded in the period.
Manufacturing investments are based on investments by new entrants and those of existing manufacturers. They are usually calculated from the amount of money pumped into buildings, plants, machinery, vehicles, and land, among others.
According to the report, estimated cumulative manufacturing investments from 2013 to first half of 2019 stood at N4.78 trillion.
Within the first six months of 2019, investment in plant and machinery was biggest at N100.92 billion, though lower than N110.47 billion recorded in corresponding half of 2018 but higher than N72.98 billion recorded in the second half of 2018.
Asset under construction trailed with investment worth N84.06 billion; land and building attracted investment valued at N40.35 billion, while N7.97 billion was pumped into the purchase of new vehicles. More so, investment in furniture and fitting stood at N5.15 billion within the period.
Across sectoral groups, food, beverage and tobacco group ranked highest with investment worth N73.95 billion. The group was trailed by chemical & pharmaceutical sub-sector whose investment was N51.76 billion. Next was the basic metal, iron & steel group whose investment stood at N33.06 billion within the period.
For industrial zones, Ogun ranked highest with an investment of N74.56 billion. This was lower than N95.31 billion recorded in the first half of 2018 but higher than N26.16 billion recorded in the second half. This puts Ogun zone as Nigeria’s investment destination within the period.
Ikeja zone in Lagos recorded investment valued at N55.98 billion in the first half of 2019, though higher than N54.8 billion obtained in the corresponding half of 2018 but lower than N80.76 billion achieved in second quarter of 2018. Investment in Apapa zone declined to N18.52 billion as against N93.67 billion recorded in the first of half of 2018 and N47.29 billion in the second half, according to MAN’s report.
In the first half of 2019, Nigeria’s gross domestic product (GDP) growth, which measures economic activities within a period, stood at 1.97 percent. This was lower than 2.6 percent annual population growth, signifying low rate of spending and poverty among the population.
Manufacturers self-generate 13,000 megawatts of electricity and spend huge amounts in powering their factories, owing to poor power supply by distribution companies. The country is still without critical rails in many parts of the country and poor road infrastructure is a common sight.
Taxes are many and are yet to be harmonised by various levels of government and their agencies in their chase for higher internally generated revenue.
Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry (LCCI), said recently all these would naturally make Nigerian manufacturers uncompetitive and unable to find their feet in the global market.
The Nigerian economy has become unattractive to investors as old problems continue to drag the country. Cases take long to settle in courts, and government agencies work in cross purposes. The nation’s premier ports in Apapa and Tin Can, Lagos, are not easily accessible by manufacturers and exporters.
“The slight improvement, notwithstanding, port-related challenges are still present, particularly delay in clearance of imported raw-materials and machinery that are not locally available by manufacturers, including the associated high and unwarranted demurrage which oftentimes slow down manufacturing operations and increases cost of production in the sector,” CEOs of manufacturing firms said in a third quarter report compiled by MAN.
Baker Magunda, managing director/CEO, Guinness Nigeria, said social instability in agricultural communities had been rife.
He stressing the need to reduce taxes and tariffs for investors.
“When taxes get to a point that it becomes punitive to the industry, and it stops growing, it impacts a lot of people,” he stressed.
He said congestion in the nation’s ports was hurting investors’ margins.
Paul Odunaiya, managing director and CEO of Wemy Industries, called for policies that would checkmate importation of substandard products into the country.
But manufacturers expect to make more investments after an early passage of the 2020 budget, but warned that exogenous factors such as crude oil price and spread of Coronavirus would impact their decision.
ODINAKA ANUDU
