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Manufacturers Worry Over Declining Fortunes

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  • Manufacturers Worry Over Declining Fortunes

Despite all the efforts on the part of government and stakeholders to revive the manufacturing industry and set it back on the path of growth, things have instead become worse for the sector.

The President of MAN, Dr. Frank Jacobs, said this in an interview with our correspondent on Thursday.

He said, “There has not been much going on in the manufacturing sector for some time. Most of our members are battling foreign exchange challenges, among other issues.”

Although the Central Bank of Nigeria had directed banks to allocate 60 per cent of forex to manufacturers, Jacobs said the banks were not complying with the directive, adding that the situation had compelled members of the association to start souring forex from the parallel market.

He said, “The CBN’s directive had stated that 60 per cent of the forex should go to the manufacturing sector but that is not the reality. Our members have not been getting access to the forex.

“Just recently, some of our members called me to say they had resorted to sourcing forex from the black market and the practice is making their products very expensive.”

Jacobs, however, noted that one year was too short a time to assess the impact of government’s efforts to revive the sector.

According to him, manufacturers who had to embark on backward integration needed time to retool, buy new machinery and carry out research to determine which raw materials would be suitable.

Manufacturers have faced a lot of challenges since 2015 following the drop in global oil prices and the monetary policies taken by the CBN to cushion the effects on the country’s depleting foreign reserve.

One of the policies, the restriction of 41 imported items from the list of those eligible for forex at the official exchange window, has dealt a severe blow to the sector.

Manufacturers have sought a review of the policy, saying that some of their critical raw materials are on the list.

But the CBN has maintained the policy all through 2015 and 2016. The result has been that most firms whose raw materials could not be locally sourced have shut down their factories.

In August 2016, Jacobs disclosed during a stakeholders’ meeting that 50 more firms had shut down operations over the forex restriction in addition to hundreds of others that folded up in the preceding months.

The Federal Government has urged manufacturers to increase their local sourcing of raw materials to minimise the challenges of the forex situation.

A recent report by the CBN confirmed the poor performance of the manufacturing sector in January.

The report stated that the Purchasing Managers’ Index, which measures manufacturing activity, had fallen to 48.2 in January, down from 52.0 recorded in December 2016. This indicates a drop of 3.8 points in one month.

The report showed that while the manufacturing PMI dropped to 48.2 index points, the non-manufacturing PMI stood at 49.4 points, indicating a slower decline compared with the 47.1 points recorded in December 2016.

In the PMI report posted on its website, the CBN said, “A composite PMI above 50 points indicates that the manufacturing/ non-manufacturing economy is generally expanding, 50 points indicate no change; and below 50 points indicates that it is generally declining.”

Though the manufacturing PMI grew in December 2016, it had recorded declines for eleven consecutive months and averaged 45.2 in the last 12 months.

The report showed that 10 of the 16 subsectors surveyed recorded decline in the month under review while the remaining six subsectors expanded.

The six sectors are: petroleum and coal products; appliances and components; nonmetallic mineral products; food, beverage and tobacco products; textile, apparel, leather and footwear; and computer and electronic products

Despite the decline in manufacturing activity, however, the report showed that the production level index for the manufacturing sector grew for the second consecutive month, standing at 51.3 points, indicating a slower growth when compared to the 57.6 points in the month of December 2016.

But this did not have any impact on new orders as well as suppliers’ delivery time during the period as they both declined with the latter standing at 48.5 index points while the former stood at 47.9 points.

Also, the report showed that the employment level index for the January manufacturing PMI stood at 45.3 points, indicating a decline in employment level for the 23rd consecutive month.

Similarly, the report showed that the employment level index for the non-manufacturing sector PMI declined for the 13th consecutive month in January 2017.

Jacobs admitted that it was expected for the PMI to fall because of the challenges in the sector.

“Manufacturing is really taking a turn for the worse. Our members are finding it increasingly difficult coping without forex. If you observe very well, you will notice that the prices of pharmaceutical products have risen. It is because the manufacturers are sourcing forex from the parallel market to buy raw materials,” he said.

Although he admitted last year that local sourcing of raw materials by manufacturers had increased by 25 per cent, he told our correspondent that it had not provided solution to the challenges.

According to him, manufacturers need time to retool, adding that while efforts are in progress for local sourcing of raw materials, the operators still need to import those raw materials that cannot immediately be sourced locally.

“It will take time for people to retool their machines because they have to spend money on the machines; they have to spend money on research to ascertain if the local raw materials to be used are suitable for their processes,” he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

India, Spain, the Netherlands, USA, Nigeria’s Major Export Markets -NBS

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India, Spain and the Netherland top Nigeria’s export markets in the final quarter of 2020, according to the latest data from the National Bureau of Statistics (NBS).

The Commodity Price Indices and Terms of Trade Q4 2020 report showed that the United States and China trailed the three.

However, the NBS revealed Nigeria exports mainly crude oil and natural gas during the period under review.

It, “The major export and import market of Nigeria in Q4 2020 were India, Spain, the Netherlands, United States and China.

“The major export to these countries were crude petroleum and natural gas. The major imports from the countries were motor spirits, used vehicles, motorcycles and antibiotics.”

The bureau stated that the all-commodity group import index increased by 0.13 per cent between October and December 2020.

This was driven mainly by an increase in the prices of base metals and articles of base metals (one per cent), boilers, machinery and appliances; parts thereof (1.03 per cent), and products of the chemical and allied industries (0.75 per cent),” it stated.

The NBS, however, noted that the index was negatively affected by animal and vegetable fats and oils and other cleavage products.

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Economy

Onyeama: Qatar To Invest $5bn In Nigeria’s Economy

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The oil-rich state of Qatar is to invest a total of $5 billion in Nigeria’s economy, the Foreign Affairs Minister, Godfrey Onyeama, has disclosed.

Onyeama, who spoke Sunday at a send forth dinner in honour of Nigeria’s Ambassador-designate to the State of Qatar, who is also the outgoing Director of Protocol (DOP) at the State House, Ambassador Yakubu Ahmed, also stated that recent career ambassadorial appointments made by the gederal government was based on merit, experience and professionalism.

The minister further said there had been discussions with Qatar on partnership with Nigeria’s Sovereign Wealth Fund (SWF), for significant investments in the region of $5 billion in the Nigerian economy.

According to him, ‘‘Qatar is a weighty and strategic country and very strategic in that part of the world and we are putting our best feet forward to advance the interest of our country economically and in other areas.”

He recalled that President Muhammadu Buhari had visited the State of Qatar in 2016 and the Emir of Qatar, Tamim Bin Hammad Al-Thani, reciprocated with a State visit in 2019.

Onyeama also explained that only trusted hands with a track record of diligence, experience and professionalism in the Foreign Service were recently appointed career ambassadors by the federal government.

The minister said the appointment of Ahmed and other career ambassadors were predicated on posting dedicated and keen Foreign Service practitioners to serve as image makers of the country.

He said: ‘‘Ambassador Yakubu Ahmed is a dedicated professional with a penchant for rigour and detail. He is very capable and one of the best in the Ministry of Foreign Affairs. He is personable, affable, extremely friendly, dispassionate and objective.

‘‘He is going to head a very important mission, a very important country, reckoned to be one of the richest countries in the world, per capita, and there’s a lot we will be doing with the State of Qatar.”

Also speaking, the Deputy Chief of Staff, Adeola Rahman Ipaye, described the honoree as a ‘‘perfect gentleman, very even-natured and always well turned out’’.

Ipaye said he had no doubt that the newly appointed ambassador would serve the country well in Qatar, adding that: ‘‘We are further encouraged that when he completes this assignment, he would return to serve Nigeria in a higher capacity.’’

In his remarks, the Permanent Secretary, State House, Tijjani Umar, while congratulating the outgoing DOP on his appointment, lauded Ahmed for excellent service to the State House and the nation.

‘‘He served this institution and the nation with the deepest sense of responsibility and it is very important that we establish a tradition where the system appreciates those who have served it well and those who will continue to serve it well,’’ he said.

Umar urged the new envoy to keep very fond memories of his time at the Presidential Villa, assuring him of the prayers and goodwill of all the staff.

Responding, Ahmed thanked President Buhari for the great honour and privilege of making him his principal representative in Doha, Qatar.

The Ambassador-designate pledged to deplore his energy and skill to the promotion of the existing cordial relationship between Nigeria and Qatar, particularly in the areas of economic, political, cultural and consular affairs as well as other key areas.

Ahmed, who joined Nigeria’s Foreign Service in 1993, said during his years in public service he had learnt that ‘‘patriotism, selfless service, diligence, determination and perseverance will always result in the achievement of the desired objective’’.

According to him, these virtues would be his ‘‘watchword’’ in the pursuit of Nigeria’s foreign policy objectives and the attainment of national interests.

The Ambassador-designate singled out for appreciation the Chief of Staff to the President, Prof. Ibrahim Gambari, and the state Chief of Protocol, Ambassador Lawal Kazaure, saying he had learnt a lot working under their mentorship.

He expressed gratitude to the Minister of Foreign Affairs and the Permanent Secretary, State House for giving him the opportunity of a memorable work experience in the State House.

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Economy

France, Nigeria to Build New Partnership

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France is currently aiming at building a new partnership with Nigeria, with the dispatching of its Minister in charge of Foreign Trade and Attractiveness, Franck Riester, to Nigeria.

Riester, who was expected at the time of filing this report on Monday, is scheduled to visit Nigeria from 12-14 April, 2021.

A statement from the French Embassy in Nigeria said: “Franck Riester is visiting Nigeria from 12 to 14 April, a visit that follows up on the priorities set by French President Emmanuel Macron during his official visit to Nigeria in July 2018 and his desire to build a new partnership between Africa and France.

“As the largest economy in Africa and the economic engine of West Africa, Nigeria is indeed a major partner for France, the first in sub-Saharan Africa with bilateral trade amounting to a total of 4.5 billion USD in 2019 (2.3 billion USD in 2020, due to the Covid-19 pandemic).”

It disclosed that the minister will have several official meetings in Abuja and Lagos, in order to underline the importance of the bilateral economic relationship and to prepare the summit on the financing of African economies in Paris on 18 May.

It revealed that the objective of the mission is also to further strengthen the links between the French and Nigerian private sectors, and “in this regard, the minister will have in-depth discussions with the main Nigerian economic actors to strengthen bilateral cooperation and investments, both in Nigeria and in France, particularly in the logistics sector”.

It said while in the country, the minister would meet with young Nigerian entrepreneurs in the cultural and creative industries sector, to discuss the major role of their country in African creativity and the development of the African entrepreneurial ecosystem, with the support of France.

It further said: “The minister will also open the ‘Choose Africa’ conference, a €3.5 billion initiative by President Emmanuel Macron dedicated to supporting the development of start-ups and SMEs in Africa to enable the continent to benefit fully from the opportunities of the digital revolution.”

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