The Manufacturers Association of Nigeria, has stated that 2024 may not be a good year for the Nigerian manufacturing industry, at least not in the first half of the year.
According to Arise News, the declaration was contained in MAN’s “Manufacturing Sector Outlook for 2024,” which was released on Tuesday by MAN’s Director General, Mr. Segun Ajayi-Kadir.
It pleaded with the government to recognize manufacturing as a key driver of sustained economic growth in the country and to give the sector the priority that it deserved.
According to MAN, “Based on the observed trend, it is clear that the outlook for the manufacturing sector in 2024 may not be positive, at least in the first half of the year.
“The period will be difficult, with a sliver of hope for recovery from the third quarter. The anticipated rebound is heavily reliant on policy stimulus backed up by a mix of domestic growth-driven, export-focused, and offensive trade initiatives.
“This will promote resilience, steady growth and ensure that the sector gains meaningful traction in the later part of the year.”
According to Ajayi-Kadir, “Average capacity utilization will still hover around the 50 percent threshold as the FX-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.”
He added that the sector may see a marginal improvement in manufacturing output as FX and interest rate-related challenges ease in the third quarter.
“Higher manufacturing output is expected to begin in the third quarter of the year as the government disburses budget capital provisions to abandoned, ongoing, and new capital projects, with a preference for locally made products.
“Ongoing concessions of seaports, airports, and roads may also provide opportunities for the cement sub-sector, as well as contribute to infrastructure upgrades required to boost manufacturing productivity.
“Hopefully, the government will see the manufacturing sector as the key,” the association added.
He went on to say that the results of the emerging upward surge in global oil prices, domestic oil and gas production, local refining of petroleum products, and projected gains in exchange rate unification would promote stability in the FX market and have a positive impact on manufacturing in the second half of the year.
This will reduce the pressure on FX demand and boost the inflow of oil and gas export proceeds.
On top of that, “the ongoing tax reforms and the envisaged bank recapitalization will frontally address the challenges of multiple taxation and poor access to credits that have continued to limit manufacturing sector performance, if successfully implemented,” he added.
According to Ajayi-Kadir, the government should mandatorily increase patronage of made in Nigeria items by lowering the country’s over-reliance on imported goods. The three branches of government shall ensure that Executive Order 003 is followed by respective ministries, departments, and agencies.
“To address the challenges of low productivity and imported inflation, the government should encourage local sourcing of raw materials through comprehensive and integrated incentives.”
It also encouraged the federal government to prioritize FX and credit allocation to manufacturers, as well as “maintain all measures to increase the level of liquidity and degree of stability.”
MAN also advised the CBN to mobilize commercial banks to intentionally provide long term single digit interest loans to the manufacturing sector to fast-track the actualization of a $1 trillion dollar economy.
