The Manufacturers Association of Nigeria (MAN) said that Nigeria’s manufacturing macro-economy and operating environment has been bolstered by the marginal recovery in some key manufacturing indicators, leading to a gradual improvement in the fourth quarter (Q4) of 2021.
In his fourth quarter report on the Manufacturers CEO Confidence Index (MCCI), the association’s chairman, Mr. Mansur Ahmed, clarified that although changes in almost all manufacturing indicators as measured in the report are still not as desired, the performance of the fourth quarter is better than what was obtained in the 3rd quarter of 2021.
The MCCI is an index set up by MAN to measure the evolution of the quarterly pulsation of manufacturing activities in relation to the evolution of the macroeconomics and government policies. The index is considered MAN’s barometer used to aggregate the views of manufacturing company CEOs on changes in the economy.
In the report, Ahmed said manufacturer resilience, seasonal trading and passive policy support supported manufacturing in the quarter despite the prevalence of familiar and emerging excessive fiscal challenges faced by manufacturers.
The manufacturing sector in the fourth quarter of the year under review, overall recorded a mixed grilled performance caused by the slight improvement in the indices of the operational environment and the macroeconomic atmosphere attested by the high points. This, he said, cumulatively triggered the increase in the overall MCCI score for the quarter to 55.4 points from 54.0 points in the previous quarter.
“Manufacturing performance is still below the mark”, Ahmed explained, saying, “notwithstanding the marginal improvement in the operating environment during the quarter under review, the industry still faces many familiar constraints. Some of these challenges listed by the manufacturers are clearly presented in this report.
The President further advised the government to implement mechanisms such as incentives to encourage investment in raw materials, pharmaceutical and petrochemical materials, iron and steel, etc. He also called on the government to specifically ensure the safety of lives and investments in industrial zones.
“In order to improve the performance of the sector, the government must intentionally put in place a mechanism that will address these challenges on a permanent basis by considering and implementing the following recommendation:
“Encourage further investments in the development of raw materials at the local level through backward integration and resource-based industrialization initiatives. The government should call on more investors to participate in these initiatives with appropriate and specific incentives.
“For example, there is an urgent need for investment and production of Active Pharmaceutical Ingredients (APIs) in the country; machinery investment and production; iron and steel; petrochemical materials, etc. to support manufacturing activities.
“Pay special attention to the safety of life and investment in industrial areas; properly delineate and improve security infrastructure in the various industrial areas of the country, especially in the northern part of the country for priority attention. The government should also invest quickly in modern security like drones, cameras, etc. for robust area monitoring,” Ahmed said.
The President of MAN in the MCCI report highlighted the need to ensure an effective allocation of available foreign exchange to the productive sectors, in particular to the manufacturing sector for the importation of raw materials and vital machinery and equipment which are not available locally. .
He also stressed the need for the government to expressly direct the Central Bank of Nigeria (CBN) to consult with the Ministries of Industry, Trade and Investment and effectively engage MAN on measures to improve the supply of foreign currency to manufacturing companies.
He said the Ministry of Science, Technology and Innovation should be tasked with inaugurating the Secretariat which will implement the strategies of the Executive Order and the Standards Organization of Nigeria (SON). The Secretariat will designate local manufacturers of LPG (liquefied petroleum gas) gas cylinders as the priority supplier of the 10 million cooking gas cylinders to be procured by the government for 12 states of the federation.
Ahmad added, “Return milk and other dairy products to the national list in the fiscal policy guidelines to maintain consistency with the backward integration agenda, which has spurred heavy investment in dairy production.
“Unify the academic curriculum with industrial skills needs and requirements to ensure the sustainable development of skilled labor for industries. The government should urgently synchronize the curricula of higher education institutions, especially polytechnics, with the skills needs of industries. The various government vocational education and training centers should also be revamped to provide the skills industries need.
“Revisit the resuscitation of existing national refineries to produce fuels locally, undertake the rehabilitation of key road corridors, improve trade facilitation infrastructure and deepen the ongoing development of the railway system to change the narrative on the operating environment from a high cost to low cost production environment.
Regarding electricity, Ahmed said there was a need to maintain the eligible customer initiative to ensure that more electricity is supplied to the manufacturing sector.
The Manufacturing Association of Nigeria, in its index report, further advised the government to, “Strengthen the Bank of Industry (BOI) and the Bank of Agriculture (BOA) to provide adequate liberal financing to the manufacturing sector;
“Monitor the implementation of Executive Order 003 to ensure compliance by MDAs to stimulate business in the manufacturing sector, publish the list of harmonized taxes and levies approved for the manufacturing sector by the Joint Tax Board (JTB) to resolve the problems of multiple taxes and levies.
“Streamline government ministries, departments, agencies, parastatals and commissions to address issues of over-regulation and duplication; Improve the customs clearance time of machinery and raw materials in national ports while making the link road accessible.