The Manufacturing Association of Nigeria (MAN) has reported that the capacity utilization in the real sector declined to 54.9% in the second half of 2022 from 59.0% recorded in the corresponding half of 2021 indicating 4.1 percentage points decline over the period.
This disclosure was contained in a summary of the survey findings by the manufacturers’ umbrella body for Q2, 2022 to monitor changes in manufacturing sector performance indicators viz-a-viz the behaviours of macroeconomic and policy environments during the period of the survey.
Commenting on the survey findings, the association’s Director General, Mr. Segun Ajayi-Kadir, attributed the decline in manufacturing capacity utilisation in the period to the adverse effect of high cost of energy and the Russian Ukrainian war, the grave effects of the Naira redesign policy and other challenges such as acute shortage of forex for importation of raw materials and machines, high cost of borrowing and many more in the economy.
The survey also indicated that the sector’s factory output value declined to N2.68 trillion in the second half of 2022 from N3.73 trillion recorded in the corresponding half of 2021.
The performance of the manufacturing sector based on the outcome of the survey is corroborated by the GDP reports of National Bureau of Statistics (NBS) which showed that output growth of the sector declined to -1.91 percent in the third quarter of 2022 from 3.0 percent recorded in the second quarter before moving up to 2.83 percent in the fourth quarter of the year.
Ajayi-Kadir said that it had become critically important that the challenges identified by manufacturers in the course of the survey were adequately addressed by the government by improving forex availability; and prioritizing forex intervention through the official market, particularly to support the raw materials and machine needs of the industries.
Other measures he canvassed for the remediation of the constraints are improving forex allocation to industrial sector and enhance the capacity of designated banks to efficiently process application of forex by manufacturers; Granting concessional forex allocation at the official forex market to industries for importation of productive inputs that are not locally available; unifying the various forex windows in the country.
