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Manufacturers’ Capacity Still Underutilised

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The Manufacturers’ Association of Nigeria (MAN) has said the manufacturing sector was producing at slightly above 51 per cent, as capacity was still under-utilised.


The first quarter (Q1) Composite Manufacturers’ CEO’s Confidence (MCCI) index report of the Association revealed the index for Q1, 2019, stood at 51.3 points, clearly depicts a manufacturing sector that is slightly above the minimum threshold.


It added that the sector’s 51.3 per cent level of productivity was inadequate and called on policy makers to increase the tempo of responsibility to stimulate output.


Although the report noted that the confidence level of CEOs in the sector, though not negative, was dwindling, as performances of some sectors and industrial zones fell short of the 50 points benchmark.


The MCCI is a quarterly survey conducted by MAN to measure the pulse of the manufacturing sector. The report took into account manufacturers’ perception on a set of diffusion factors which include, current business condition, current employment condition, production level, general macroeconomic condition, business operating environment, among others.


Indeed, seven out of the 13 industrial zones in the country recorded indexes below 50 points, while seven out of the 10 sectoral groups recorded 50 points and below under the latest survey.


Specifically, industrial zones within Imo/Abia, Edo/Delta, Kaduna, Apapa, Anambra/Enugu, Bauchi/Benue/Plateau, and Abuja performed below the 50 points benchmark, with some going as low at 35 points.


With manufacturers having to contend with too many challenges that limit their competitiveness, operators in the sector decried the poor electricity supply to industrial firms, over regulation, multiple taxes and levies, poor accessibility to ports/high demurrages, poor economic infrastructure, difficulty in sourcing foreign exchange, low patronage, and counterfeiting/influx of substandard goods.

 

The president of MAN, Ahmed Mansur, explained that the newly-created MCCI report revealed that the manufacturing sector was struggling as operating conditions remained challenging.


Mansur said the association would no doubt continue to promote a friendlier operating system for the manufacturing sector in Nigeria, to remain global and stay competitive.


According to him, the MCCI was an integral part of the four-year transformation roadmap of the association. This index is a strategic effort to proactively review the impact of government policies on the manufacturing sector, with a view to using the evidence-based feedback to advocate for a specific direction of government policy formulation and implementation.


MAN said there was the  need to continuously fine-tune the forex policy in the country, particularly as it concerns the manufacturing sector, saying that most MAN CEOs do not agree that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.


The report lamented the unjustifiable double-digit cost of borrowing from the commercial banks, saying this discourages investment, insisting that commercial banks’ loans to the manufacturing sector do not encourage productivity.

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