The Manufacturers Association of Nigeria said investments in the manufacturing sector peaked at N178.39bn (year-on-year) in the first half of 2022 from N144.14bn recorded in the corresponding half of 2021; thus, indicating N34.25 billion or 23.7 percent increase over the period.
This and more were contained in Executive summary of H1 2022 Economic Review report of the association made available to NOTM.
It stated further that however, it increased by N17.51 billion or 10.8 percent (half-on-half) when compared with N24 billion recorded in the second half of 2021.
The H1 report further indicated that “Although statistics show that investment increased in the period, this was due to inflationary effect as investment was grossly affected by shortage of forex and limited funding in the period under review.
“In addition, the increase in Royalty Rates on all solid minerals – limestone (233.3 percent), marble (33.3 percent), laterite (33.3 percent), clay (25 percent), Shale (20 percent), Gypsum (20 percent) and clay (100 percent) – by the Federal Ministry of Mines and Steel Development in the period.
“The increase has adverse consequences on the needed private sector investment in the development of solid mineral in the country.”
Within the period under review, specifically, MAN said its members created eight thousand, five hundred and forty three (8543) jobs in the first half of 2022 as against 7602 jobs recorded in the corresponding half of 2021 and 8508 in the second half of 2021.
The association noted that the marginal increase in jobs created in the sector in the period under review was due to positive and continuous adjustments in manufacturing activities to accommodate the current economic hardship and sustain production by manufacturers.
The manufacturers lamented electricity supply from the national grid to the sector degenerated in the period under review.
MAN said, “Although, average daily supply to the sector increased to 12 hours in the first half 2022 from 11 hours of the second half of 2021, the average number of outage per day increased 6 times from 3 times recorded in the preceding half, which more than off-set the increase in supply in the period.
“The poor power supply from the grid fueled self-energy generation among manufacturers as expenditure on alternative energy source soared to N67.77 billion in the first quarter of 2022 (year-on-year) up from N32.18 billion recorded in the first half of 2021 and N45.04 billion of the second half respectively.
The HI report indicated that production value, however recorded a 9.00 per cent increase to N3.99tn in the first half of 2022.
It added that the manufacturing sector factory output value increased to N3.99tn in the first half of 2022 (year-on-year) up from N3.66tn recorded in the same half in 2021. thus, indicating N0.33tn rise during the period.
It however flayed the average lending rate to the manufacturing sector from the commercial banks which increased to 23.5 percent (year-on-year) up from 19 percent of the corresponding half in 2021, but declined by 0.5 percentage point when compared with 24 percent interest charged to manufacturers in the second half of 2021.
MAN hinted that the growing lending rate in the economy “is underscored by among others the upwards review of the Monetary Policy Rate (MPR) from 11.5 percent to 13 percent by the CBN in May 2022 even though the asymmetric corridor at +100/-700 around MRP; Credit Reserve Ratio (CRR) at 27.5% and Liquidity Ratio at 30% remained unchanged; and the rising global interest rate due to the Russian-Ukrainian face-off. ”
The report indicated further that the performance of the sector in the period under review suggests that it is not ‘Uhuru’ and emphasizes the need for a more proactive, broad and sector focused measures to addressing both the recent challenges thrown up by the Russian-Ukrainian war and the perennial ones, which include shortage of Forex, epileptic power supply, and stoppage of export of maize, cassava etc.
The H1 report gave bent to these, calling on the government to: “Improve the level of forex allocation to the productive sector including manufacturing leveraging on the high and sustained crude oil prices in the international market.
“Carry out further investment in the electricity value chain and commit to adding 10000MW to the current electricity distributed in the country; Embrace and support significant development of energy mix and renewable: the country has huge potentials for Solar and Wind
“Restrict the exports of maize, cassava, wheat, food related products and other manufacturing inputs; Suspend the 15 percent charges on imported wheat; encourage growth in domestic investment in Agriculture.
“Incentivize investment in local development of raw materials; Give attention to domestic production of Active Pharmaceutical Ingredients (API) and Basic chemicals by incentivizing investment in the area; refocus on Backward Integration and Resource-Based Industrialization; Reverse the duty for Annealed Cold roll back to 45 percent from the new 5 percent.
“Commission the resuscitate of the existing national refineries to produce fuels locally; Review the gas price for domestic consumption to be in tandem the with the export price which is about $3.25 per cubic meter.
“Publish the list of approved harmonized taxes and levies for the manufacturing sector by the Joint Tax Board (JTB) to address the issues of multiples taxes and levies; fully implement the Steve Oronsanye Report on the reduction and re-alignment of Government Agencies and Parastatals in order to streamline the number of taxes, levies, fees and administrative charges.”
