Manufacturing Capacity Utilisation Increases To 57.9% In H1, 2022

Capacity utilisation in the manufacturing sector increased to 57.9 per cent year-on-year in the first half of 2022 from 52.2 per cent recorded in the same half in 2021.

This was stated in the Executive Summary of H1 2022 Economic Review by Manufacturers Association of Nigeria (MAN). According to the review, this indicates 5.7 percentage point decline over the period.   However, it declined  by 1.1 percentage points (half-on-half) from 59 percent recorded in second half of 2021.

“The oscillatory and sub-optimal capacity utilisation of the sector in the   period under review aligned with the risks and difficulties posed by the lingering effect of COVID-19 pandemic and the adverse impact of the Russian-Ukrainian war such as the rising commodity prices and disruption of global supply chain in the period.

“However, notwithstanding the challenges in the period, more capacities came up in the Cable sub-sector with the commencement of optical fibre production by Coleman Technical industries, the first of its kind in the whole of ECOWAS region,” it said.

The director-general of MAN, Segun Ajayi-Kadir, added that, “manufacturing sector factory output value increased to N3.99 trillion in first half of 2022 (year-on-year) up from N3.66 trillion recorded in the same half in 2021; thus, indicating N0.33 trillion or 9.0 increase over the period.

“It also increased by N0.26 trillion or 7.0 percent (half-on-half) when charmed with N3.73 trillion achieved in the second half of 2021.  Production was strongly hampered by lack of forex for importation of raw materials that are not available in the country in all the sectoral groups, safe for Food sub-sector which has undergone a significant level of backward integration.”

He, however, said the N10 increase of excise duty on non-alcoholic drinks grossly affected production in that segment of the sector, saying “in addition, the implementation of migration of National List to Chapter 99 of ECOWAS Common External Tariff (CET) is perverse with bureaucracy and complexities among Government agencies, leading delay in getting raw materials to factories.”

Ajayi-Kadir added that “specifically, the basic metal group are heavily challenged by the lowering of duty to Annealed Cold roll to 5 percent from the previous 45 percent, which made domestic manufacturing of the product uncompetitive.

“Also, activities in the Motor Cycle Assembly sub-sector were severely affected following the suspension of motor cycles in some areas across States, particularly in Lagos.  More so, the increase in the duty of paper from five per cent to 20 per cent adversely affected productivity in the Paper products sub-sector in the period under review.”

He noted that, manufacturing, like every other economic activity in the country and across the world, suffered adverse shock in the first six months of 2022.

MAN’s DG emphasised that the current performance of the sector, suggesting  it is not ‘Uhuru’, emphasising the need for a more proactive, broad and sector focused measures to addressing both the recent challenges thrown up by the Russian-Ukrainian war and the perennial ones.