By Merit Ibe Manufacturers have attributed the decline in the manufacturing sector’s contribution to the economy to
By Merit Ibe
Manufacturers have attributed the decline in the manufacturing sector’s contribution to the economy to high cost of energy, naira redesigning policy, shortage of foreign exchange for importation of raw materials and machines, high cost of borrowing, among others.
According to the Nigerian Bureau of Statistics (NBS), the contribution of the manufacturing sector to Nigeria’s Gross Domestic Product (GDP) in real terms declined to N1.5 trillion in the second quarter ended June 2023 (Q2’230), The NBS reported that the real GDP for Q2’23 stood at N17.72 trillion, a 0.17 percent decrease from N17.75 trillion in Q1’23.
The sector’s contribution to real GDP in percentage terms also fell to 8.40 percent from 10.13 percent in Q1’23.
Meanwhile, the real GDP growth in the manufacturing sector in the second quarter of 2023 was 2.20 percent, 0.81 percentage points higher than its growth level in the preceding quarter at 1.61 percent.
Nigeria’s manufacturing sector growth has slowed to the lowest in three years on account of challenging macroeconomic activities.
CEO of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said: “Amid the harsh business-operating environment evidenced by poor macroeconomic indices, the underperformance was largely driven by the nationwide cash crunch in the first quarter of the year.”
According to Manufacturers Association of Nigeria (MAN) bi-annual economic review for the H2 of 2022 showed a worsening condition of manufacturing activities in the country in almost every parameter.
Consequently, the operators are of the view that it is critically important that the challenges faced by manufacturers are adequately addressed, especially by improving forex availability to the manufacturers via the official windows.
The MAN has recommended the prioritisation “of forex intervention through the official market, particularly to support the raw materials and machine needs of the industries; improve forex allocation to the industrial sector and enhance the capacity of designated banks to efficiently process application for forex by manufacturers; grant concessional forex allocation at the official forex market to industries for importation of productive inputs that are not locally available.”
It also recommended the development and implementation of a roadmap for improved power supply that would focus on off-grid solutions and independent power projects by the private sector to ensure adequate supply of energy for production and also attract and expand investment.
The association urged the government to “carry out further investment in the electricity value chain and commit to adding 10000MW to the current electricity distributed in the country.”
It also called on the government to “embrace and support significant development of energy mix and renewable: the country has huge potentials for solar and wind while commissioning the resuscitation of the existing national refineries to produce fuels locally.”
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