The Manufacturers Association of Nigeria (MAN) has voiced concerns about the current state of the sector in the country.



&#8220;Manufacturing growth rate nosedived to 0.48% in Q3 2023 as against 2.4% in 2021. Judging from the observed trend, it is obvious that the outlook for the manufacturing sector in 2024 may not be a positive one, at least in the first half of the year. The period will be challenging, with a subtle possibility of recovery from the third quarter,&#8221; Segun Ajayi-Kadir, MAN&#8217;s director general revealed in a statement.



Ajayi-Kadir asserted the need for a comprehensive approach. &#8220;The envisaged recovery is highly dependent on the deployment of policy stimulus supported with a synthesis of domestic growth driven, export-focused, and offensive trade strategies.&#8221;



He outlined key recommendations for the government to revitalize the sector. &#8220;Expend cost-saving from fuel subsidy to deploy a bouquet of production-focused policies, backed with more structural measures.&#8221;



Among the recommendations were overhauling the power sector, incentivizing investment in renewables, and prioritizing patronage of made-in-Nigeria products in government purchases and contracts.



To address challenges related to raw materials, Ajayi-Kadir proposed comprehensive incentives for local sourcing. He stressed the importance of utilizing the 2024 budget for infrastructural development in industrial hubs to reduce operational costs and enhance competitiveness.



In addressing the foreign exchange situation, Ajayi-Kadir recommended measures such as managing the floating exchange rate system, prioritizing forex and credit allocation to manufacturers, and encouraging foreign direct investment in non-oil sectors.



&#8220;The [Central Bank of Nigeria] CBN should intensify its collaboration with the fiscal authority for proper policy alignment,&#8221; Ajayi-Kadir said, emphasizing the need for a sustainable framework for credit interventions in the manufacturing sector. He added a call for long-term, single-digit interest loans to fast-track the sector&#8217;s growth, aiming for the ambitious goal of a $1 trillion economy.



In a keynote address at the 58th Annual Bankers’ Dinner in November, Olayemi Cardoso, CBN&#8217;s governor, revealed the path for this year, emphasizing a commitment to price and exchange rate stability.



Reassuring stakeholders, Cardoso said, “We assure investors and the business community that the economy will experience significant stability in the short-to-medium term as we recalibrate our policy toolkits and implement far-reaching measures.”

Man working in aluminium factory with machinery

Challenging Period Awaits Nigeria’s Manufacturing Sector This Year

As Nigeria continues to grapple with its worst recession, two pressing concerns revolve around its struggle to diversify – the state of the local manufacturing industry and the level of government’s commitment towards industrialization.
Nigeria is sub-Saharan Africa’s largest economy which boggles my mind when I consider the abject decline in the real GDP, income, employment, manufacturing, and retail sales.
The Nigerian economy is chiefly governed by oil and natural gas. While the oil sector provides almost 30% of the GDP and accounts for 90% of the total export capacity, the manufacturing sector provides around just 4%.
The sector is undergoing industrial collapse. The Manufacturers Association of Nigeria (MAN) reported that 272 companies shut down in 2016, 50 of those were manufacturing companies. Other reports claim that more than 1,500 of the 2,500 registered manufacturing companies folded up while millions of employees have lost their jobs.
At the forefront of this decline is Nigeria’s reliance on oil and the failure to make hay while the sun was shining. This focus on oil derailed Nigeria’s progress to becoming an industrialized nation. The government’s recklessness is to blame for the industrial failure, such as power problems, infrastructural deficit, economic mismanagement, taxation discrepancies, policy uncertainty, weak investor confidence, restriction of foreign capital inflows, affixation to irrational importation, and, notably, the low income of consumers.
As commodity prices plummeted, the manufacturing sector has impressively emerged. Despite challenges, the huge demography and being the largest African market makes Nigeria ripe for investment. The United Nations had projected that Nigeria’s population will rise to 240 million by 2050. Also, Renaissance Capital and Frontier Advisory forecast that the country’s economy will grow to $1 trillion by 2025. These are signals of the potential of industrialization.
All that is needed to harness this potential is the willingness of the government to act. A robust manufacturing sector and a willful program for industrialization are equally crucial for the dream to be realized.
It is, therefore, unsurprising that the present government is jumping on the industrial horse to achieve economic reform that will replace the oil and gas with manufacturing and agriculture.
“My engagements with the organized and informal sectors has been mutually affirmative that we should work harder in partnership and disagree less, grow confidence with greater transparency by government, and accelerate actions rather than words, to build our capacities and secure development,” said Nigeria’s Minister of Industry, Trade and Investment, Okechukwu Enelamah, at the Nigeria &amp; Entrepreneurship Summit &amp; Honors in December.
Since then, however, not much has changed. Private businesses are still hindered by unfavorable laws. To this end, the National Assembly is working on legislative economic reform – with 30 bills, including the Petroleum Industrial Bill, Infrastructure Investment Protection and Regulation Bill, Railway Sector Reform Bill, and Tax and Revenue Law/Bill. If successful, such a revolution would be a shot in the arm for industrialization.
The hopes of entrepreneurs and local manufacturers are also bolstered by the Made in Nigeria campaign, which is receiving encouraging support from top to bottom. President Muhammadu Buhari has reassured Nigerians that his administration is working on enhancing the support of locally made goods as well as improving access to finance for small and medium-sized enterprises across the country.
Despite enduring hardship at the moment, Nigeria can be reassured that greater opportunities lie ahead.

Tag: Manufacturers Association of Nigeria

FORBES AFRICA SOCIAL MEDIA

Challenging Period Awaits Nigeria’s Manufacturing Sector This Year

Nigeria Needs Industrialization now