- Manufacturers Suffer N30bn Revenue Decline in Three Months
The manufacturing sector recorded a decline of about N30bn in output in the first quarter of this year, figures obtained from the National Bureau of Statistics have revealed.
An analysis of the Gross Domestic Product report prepared by the NBS showed that the sector recorded a total output of N2.66tn at the end of the fourth quarter of 2017.
However, the level of productivity in the sector dropped by N30bn from the fourth quarter 2017 figure to N2.63tn in the first three months of this year.
The sector had been badly hit by the harsh operating environment, which took its toll on the profit margins of many companies operating in that segment of the economy.
There are 13 sub-sectors that make up the manufacturing sector.
Out of the 13 sub-sectors, five recorded increase in economic performance between December 2017 and March this year, while eight recorded decrease in productivity.
The five sub-sectors that recorded increase in economic performance are cement from N228.8bn in December to N251.8bn in March 2018; wood and woods products, from N78.85bn to N82.14bn; pulps and paper products, from N23.67bn to N23.77bn; non-metallic products, from N104.17bn to N110.21bn; and motor vehicle assembly, from N16.48bn to N19.64bn.
The sub-sectors that recorded decline in productivity include oil refining, from N42.69bn to N41.55bn; food, beverage and tobacco, from N1.21tn to N1.19tn; textile, apparel and footwear, from N642.55bn to N610.64bn; and chemical and pharmaceutical products, from N58.91bn to N55.23bn.
The rest are plastic and rubber products, from N84.59bn to N83.99bn; electrical and electronics, from N1.9bn to N1.4bn; iron and steel, from N66.68bn to N58.82bn; and other manufacturing, from N109.53bn to N105.93bn.
Speaking on the development, finance and economic experts said while the economy might have returned to positive growth, there were structural challenges that needed to be addressed so as to improve the momentum of the manufacturing sector.
For instance, they said that the structure of the economy had yet to be fully diversified, adding that high interest rates being charged by banks were affecting the productive capacity of the manufacturing sector.
A former Managing Director, Nigeria Deposit Insurance Corporation, Mr. Ganiyu Ogunleye, said, “The fact that we are out of recession doesn’t mean all is well as we still have some fundamental problems in our economy. The structure of the economy itself is a challenge, because you know that we have relied heavily on the oil sector and efforts are on to diversify the economy away from oil and that cannot happen overnight; it is going to take time.
“So, for us to sustain our economy, particularly now that we are out of recession, we have to focus on agriculture, which I believe can lead to food sufficiency, create a lot of jobs and can also provide raw materials for the industrial and manufacturing sectors.
“So, if we focus on agriculture, we will be able to sustain our economy on a long-term basis and the other sectors too, such as power, should also be given adequate attention by the government.”
The immediate past President, Abuja Chamber of Commerce and Industry, Mr. Tony Ejinkeonye, said while the manufacturing sector might have experienced challenging times due to foreign exchange scarcity, the recent policies of the government had started bringing back confidence in the economy.
He stated, “The subdued growth rate of the sectors of the economy with high job propensities in manufacturing, construction, trade, hospital and in general services indicate that growth is neither diversified nor broad-based.
“There is a need to avoid potential disruption to the economic growth momentum with a view to allowing the economy to grow sufficiently to create employment and recede inflation.
“There is a need to also allow the economy to find and settle at a new price and wage equilibrium level, give more time to the impact of the fiscal stimulus implemented by the Federal Government to consummate and enable diversified growth.”
The immediate past Director-General, Abuja Chamber of Commerce and Industry, Dr. Chijioke Ekechukwu, stated that the government needed to step up its diversification agenda.
He said while the government had been pursuing the economic diversification since the inception of this administration, the results had not been too impressive based on the recent GDP report released by the NBS.
Apart from agriculture, particularly crop production, he noted that oil was still the leader in terms of income to Nigeria.
To simulate the economy, Ekechukwu added that there was a need for more reforms to further reduce the cost of doing business and the interest rate.
Ekechukwu stated, “The country came out of recession as a result of an improved production capacity and improved international oil prices. These two major reasons are actually out of the control of the government and so achieving that feat cannot be said to be a better plus, because if that situation had not happened, it is possible that we won’t have been out of recession.
“The area we have to give commendation to government for is the area of curtailing the insecurity in the Niger Delta, because that was another major reason why we exited recession.”
He added, “In the area of growing the non-oil sector, we have yet to make any significant effort that can take the country to the path of sustainable growth. In fact, that is where I expect that the government should put a lot of efforts considering the decline in the GDP figure in the first quarter that was released two weeks ago.
“The non-oil sector, on its own, has the capability to drive the economy in case the price of oil that is not within our control starts declining. So, there is a need to put in more efforts in agricultural development, as well as boosting the export market and the manufacturing sector.”