As the economy rebounds post-COVID-19, the Manufacturers Association of Nigeria (MAN) has called on the federal government to intensify its efforts for economic growth and development through enabling policies and activities, while giving increased attention to crucial sectors like manufacturing.
MAN, in a public statement signed by Segun Ajayi-Kadir, its director-general, said although the economy witnessed a successive positive growth rate of 0.51 percent following the 0.11 percent recorded in Q4 2020, the latest growth number was described as a sub-optimal performance when compared with the 2.1 percent achieved in the same period of 2019. This signifies the need for proactive efforts to increase the growth momentum going forward.
Speaking about the country’s manufacturing sector the DG noted that it has the potential to drive economic growth remarkably however it is still struggling with inherent challenges, which is affecting its growth trajectory.
He noted some subsectors which remained operational in the heat of the pandemic and emerged winners particularly the pharmaceutical and chemical subsector, the food & beverage subsector, and the cement, basic metal, iron & steel subsectors, noting that these have displayed resilience and if properly optimized will deliver better value.
However, the GDP report released by the National Bureau of Statistics (NBS) noted that the sector’s performance was driven majorly by four sub-sectors out of the 13 subsectors, three of which emerged winners amid the pandemic. These are the cement subsector with 11.20 percent growth, food, beverage, and tobacco with 7.11 percent, chemical, and pharmaceuticals with 3.91 percent and other manufacturing with 3.75 percent.
The motor vehicles & assembly subsector achieved 3.29 percent while the non-metallic products plastic and the rubber products subsectors recorded 2.88 percent and 1.68 percent respectively.
Ajayi-Kadir noted that it was surprising the sector performed beyond projected figures, achieving 3.4 percent during this period, saying there was no recorded high level of economic activities in the sector that would justify such a growth rate as manufacturers are currently experiencing the rising cost of manufacturing inputs.
“In Q1 2021 manufacturing activities rebounded to the level of pre-COVID-19 period, so it is expected that the sector will present better performance. However, we are mindful of the negative impact of the depreciation in naira value and acute shortage of FOREX as they remained huge challenges in the quarter,” he explained.
Foreign exchange shortages have been an ongoing challenge in Nigeria and led to the death of 54 manufacturing firms in 2016 alone. Many more have followed since then with manufacturers saying they get two to 10 percent of their dollar needs from the market even after waiting for 30-90 days.
He recommended that the government intensify its intervention initiatives and follow through on the cost reduction aspect of ease of doing business.
“There is urgent need to create a more-friendly operating environment and deliberately support the productive sector in a strategic manner, setting priorities along the line of improved infrastructure, competitiveness and stronger industrial linkages,” he said.