Manufacturing output down YoY
By Jeph Ajobaju, Chief Copy Editor
Manufacturing output dropped 9.7 per cent year-on-year (YoY) from N7.39 trillion in 2021 to N6.67 trillion in 2022, triggered by foreign exchange (forex) scarcity, high inflation, high cost of energy, and reduced household purchases.
Manufacturers Association of Nigeria (MAN) Director General Segun Ajayi-Kadir disclosed this as part of the findings of a survey of the sector for the second half of 2022 (H2 2022).
He also disclosed increased difficulty in sourcing forex compelled manufacturers to use expensive local raw materials for their operations which raised average local raw materials utilisation to 52.8 per cent in 2022 against 51.5 per cent in 2021.
“Manufacturing sector factory output value declined to N2.68 trillion in the second half of 2022 (H1’2022) from N3.73 trillion recorded in the corresponding half of 2021 (H2’2022), thus, indicating N1.05 trillion or 28 percent declined over the period.
“It also declined N1.31 trillion or 32 percent when compared with N3.99 trillion recorded in the preceding half (H1’2022), Ajayi-Kadir said.
“The value of manufacturing production totaled N6.67 trillion in 2022 as against N7.39 trillion recorded in 2021.
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Negative factors
“Manufacturing production was severely affected in the second half of 2022 by absence of implementation of new capital projects by the government as they focused on the election,” Ajayi-Kadir added, according to Vanguard.
“Production in the sector was also negatively affected by limited purchases by households due to the naira redesign policy, the high inflationary pressure in the country, high cost of energy, particularly diesel and gas, acute shortage of forex for importation of raw materials and machinery needs of the sector that are not locally manufactured in the time being and many more.”
Ajayi-Kadir implored the government to direct more funding towards backward integration to ensure the manufacturing sector remains competitive.
“Local raw materials utilisation in the sector averaged 52.8 percent in 2022 as against 51.5 percent recorded in 2021.
“The increase in the local raw materials utilization in the sector during the period is due to increased difficulty in sourcing forex which compelled manufacturers to look more inward for raw materials notwithstanding the associated huge cost.
“It is therefore important for the government to re-evaluate its role in local development and production of raw materials in terms of funding.”