Naira Value Depreciation, Forex Hiccups Cripple Manufacturers’ Performance In Q4

Naira value depreciation, difficulties in accessing foreign exchange, among others crippled the performance of manufacturing firms in the last quarter of 2022.

To this end, the Manufacturers CEO’s Confidence Index (MCCI) for the fourth quarter of 2022 dropped to 55.0 points down from 55.4 points recorded in the third quarter of the year.

This was contained in the Manufacturers Association of Nigeria (MAN) CEO report for the fourth quarter (Q4), 2022.

The MCCI is a quarterly research and advocacy publication that measures changes in pulse of over 400 Chief Executive Officers (CEO’s) and trends in the manufacturing sector.

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MCCI index is computed using data generated on standard diffusion factors of business and employment conditions and production levels with a baseline score of 50 points.

According to the report, the 0.4 points decline underscores the persisting challenges and waning confidence of manufacturers in the economy in the fourth quarter of 2022.

The report hinged the decline on increase in the Consumer Price Index (CPI), erosion in Naira value, difficulty in sourcing foreign exchange for productive use, high cost of energy, insecurity and the lingering Russian-Ukraine war.

“Current employment condition and production level in the next three months scored above the 50 henchmark points though with a decline in the period respectively.

“Employment condition for the next three months dipped below the benchmark points to 48.8 points which is also below 49.2 points obtained in the preceding quarter.

ployment decision by manufacturers is so difficult due the unpredictability and difficulty in macroeconomic movement.

“In summation, the fourth quarter of 2022 appeared to be more difficult to manufacturers than the level of hardship in the preceding quarter,” it said.

Further analysis of the report showed that the index score of pulp, paper, printing and publishing (49.6 points) and motor vehicle and miscellaneous assembly (48.4 points) fell below the 50 benchmark points.

It added that the motorcycle sub-group of the motor vehicle and miscellaneous assembly had been facing domestic difficulty following the banning of motorcycles by various states governments.

“Consequent upon the above trends, it is crucially important for government to have a shift towards a better exchange rate management; and moderate the rising energy cost via better management of refined petroleum products imported into the country.

“These among other measures would no doubt help to reduce the current high inflation, which is fast eating-up the working capitals of businesses including manufacturing in the economy,” it stated.