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Nigeria’s Manufacturing Index Sustains Decline

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  • Nigeria’s Manufacturing Index Sustains Decline

The Manufacturing Purchasing Managers’ Index (PMI) stood at 47.7 index points in March 2017, indicating decline in the manufacturing sector for the third consecutive month, but at a slower rate.

The PMI reflects the economic health of the manufacturing sector. The PMI is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

According to the latest PMI report for March, posted on the Central Bank of Nigeria’s (CBN) website, 13 of the 16 sub-sectors reported declines in the review month in the following order: primary metal; transportation equipment; plastics and rubber products; electrical equipment; paper products; printing and related support activities; petroleum and coal products; non-metallic mineral products; furniture and related products; cement; fabricated metal products; computer and electronic products; and chemical and pharmaceutical products.

However, the appliances and components; food, beverage and tobacco products; and textile, apparel, leather as well as footwear sub sectors reported expansion in the review period.

But the production level index for manufacturing sector expanded in March 2017.

The index at 50.8 points indicated an expansion in production level as compared to contraction in the previous month. Seven manufacturing sub-sectors recorded increase in production level during the review month in the following order: appliances & components; petroleum & coal products; textile, apparel, leather & footwear; food, beverage & tobacco products; cement; computer & electronic products; and furniture & related products.
The non-metallic mineral products sub-sector remained unchanged, while the primary metal; transportation equipment; electrical equipment; plastics & rubber products; paper products; chemical & pharmaceutical products; printing & related support activities; and fabricated metal products recorded declines in production in March 2017.

At 45.6 points, the index declined for the third consecutive month but at a slower rate when compared to the level achieved in February 2017. Twelve sub-sectors recorded declines in the following order: primary metal; plastics & rubber products; petroleum & coal products; printing & related support activities; electrical equipment; transportation equipment; computer & electronic products; paper products; fabricated metal products; furniture & related products; cement; and non-metallic mineral products. The remaining four sub-sectors grew in the following order: appliances & components; food, beverage & tobacco products; textile, apparel, leather & footwear; and chemical & pharmaceutical products.

Similarly, at 51.3 index points, the supplier delivery time index for the manufacturing sub-sectors improved in March 2017. Nine sub-sectors recorded improved suppliers’ delivery time in the following order: computer & electronic products; electrical equipment; paper products; plastics & rubber products; chemical & pharmaceutical products; primary metal; printing & related support activities; food, beverage & tobacco products; and fabricated metal products.

The appliances & components; petroleum & coal products; and transportation equipment sub-sector remained unchanged, while the cement; textile, apparel, leather & footwear; furniture & related products; and nonmetallic mineral products sub-sectors recorded declines in delivery time in March 2017.

Employment level index in March 2017 stood at 43.6 points, indicating a decline in employment level for 25 consecutive months.

However, the index declined at a slower rate when compared with the level in the preceding month. Of the 16 sub-sectors, 15 recorded declines in the following order: electrical equipment; primary metal; petroleum & coal products; transportation equipment; non-metallic mineral products; cement; chemical & pharmaceutical products; paper products; furniture & related products; plastics & rubber products; computer & electronic products; fabricated metal products; textile, apparel, leather & footwear; printing & related support activities; and food, beverage & tobacco products. The appliances & components sub-sector recorded growth during the review period.

In the same vein, at 49.1 points, the raw materials inventory index declined for the third consecutive months. Of the 16 sub-sectors, nine recorded declines in raw materials inventories in the order: paper products; plastics & rubber products; non-metallic mineral products; computer & electronic products; printing & related support activities; petroleum & coal products; electrical equipment; furniture & related products; and chemical & pharmaceutical products. The cement and primary metal sub-sectors remained unchanged, while the remaining five sub-sectors recorded increase in inventories in the order: transportation equipment; appliances & components; textile, apparel, leather & footwear; food, beverage & tobacco products; and fabricated metal products.

The composite PMI for the non-manufacturing sector declined for the 16 consecutive months. The index stood at 47.1 points, indicating a slower decline when compared to the 44.5 points in February 2017. Of the 18 non-manufacturing sub-sectors, 11 recorded declines in the following order: construction; professional, scientific, & technical services; real estate, rental & leasing; management of companies; repair, maintenance/washing of motor vehicles; accommodation & food services; wholesale/retail trade; arts, entertainment & recreation; information & communication; utilities; and health care & social assistance. The remaining seven sub-sectors: public administration; educational services; agriculture; water supply, sewage & waste management; electricity, gas, steam & air conditioning supply; transportation & warehousing; and finance & insurance reported growth in the review month.

The business activity index stood at 49.8 points in March 2017, from its level of 45.4 points in February 2017.

At 46.4 points, the new orders index declined for the 15 consecutive months in March 2017, but at a slower rate. Of the 18 sub-sectors, 10 declined in the following order: construction; management of companies; professional, scientific, & technical services; information & communication; wholesale/retail trade; utilities; real estate, rental & leasing; repair, maintenance/washing of motor vehicles; accommodation & food services; and arts, entertainment & recreation.

The water supply, sewage & waste management sub-sector remained unchanged, while the remaining seven sub-sectors recorded growth in the order: public administration; electricity, gas, steam & air conditioning supply; finance & insurance; agriculture; educational services; health care & social assistance; and transportation & warehousing.

Money Market Weekly Review

Money market rates last week traded within a band of 12.2 per cent and 13 per cent. The week opened with system liquidity of N13.9 billion as money market rates –open buy back (OBB) and overnight rates settled at 12.7 per cent apiece owing to CBN’s open market operations (OMO) mop ups and special market interventions.

The central bank in a bid to squeeze excess liquidity from the system conducted OMO auctions on all trading days of the week save for Wednesday. An OMO maturity worth N51.5 billion hit the system on Thursday; however, the impact was offset by the OMO sales conducted that same day bringing system liquidity to N92.1 billion.

Also, this week, there will be maturing treasury bills of N35 billion, N33.5 billion and N166.4 billion for the 91-day, 182-day and 364-day tenors respectively as well as rollovers of the same amounts.

Forex Market Review

After sustaining intervention in the currency market to achieve a convergence between official and unofficial rates, the CBN issued a directive to banks last week to sell forex for BTA, PTA, School and medical fees to retail users at N360/$1, from the N375/$1 it sold in the preceding week.

The central bank sold to banks at N357/$1 while Bureaux de Change (BDCs) who are to sell to end-users at N362/$1 were sold to at N360/$1.

A sum of $100 million wholesale forward intervention was offered and fully allotted to banks last Monday while another $100 million was offered to wholesale dealers last Thursday.

But the exchange rate on the parallel market which had appreciated earlier in the week to N375/$1 on Tuesday, weakened to N390/$1 last Friday.

In furtherance of its determination to sustain liquidity in the FX market, the CBN last Thursday announced its decision to commence bi-weekly FX sales to licenced BDCs operators from today. Sales amount to BDCs will also be increased to $10,000 (US$5,000/bid) at a new rate that will be announced today. Licenced BDCs are to fund their accounts on Mondays and Wednesdays while they receive their purchases on Tuesdays and Thursdays respectively.
“In line with the above, we expect market rates to continue to appreciate until the CBN attains a market reopening rate,” analysts at Afrinvest stated.

Nevertheless, the CBN at the weekend disclosed that it had received reports that some customers seeking to buy forex for BTA, PTA, medical and school fees were being frustrated by some banks with the false claim that the CBN is not allocating enough forex for such invisible items.

The central bank, which made the accusation in a statement by its acting Director, Corporate Communications, Mr. Isaac Okorafor, titled: “There is Adequate Forex for PTA, BTA, Tuition & Medical Fees,” said such claim by the banks was totally untrue.

According to the CBN, all banks have more than enough stock of forex in their possession for the purpose of meeting genuine customers’ demand for BTA, PTA, tuition and medical fees.

“Indeed, on a weekly basis, the CBN has been selling at least $80 million to banks for onward sale to their customers for these invisible items.

“Members of the public seeking to buy forex for the above-mentioned purposes are, therefore, advised to go to their banks and obtain their forex,” it added.

It urged any customer that is not attended to within 24 hours for BTA/PTA or 48 hours for tuition and medical fees should call a dedicated number or send an email to the Consumer Protection Department of the CBN, with the name and branch of the non-cooperating bank.

“Furthermore, no customer should accept to buy forex from any bank at more than the currently prescribed rate of N360/$1,” it added

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.

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Julius Berger Diversifies into Agro-processing

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Julius Berger Steps into Agro-processing to Seize Diversification Opportunity

Julius Berger, a leading construction company in Nigeria, said its board of directors has approved a diversification opportunity for the firm in agro-processing.

The approval was done at a meeting held on September 22, the company stated in a statement filed with the Nigerian Stock Exchange on Thursday.

Julius Berger said the approval would help the company capitalised on diversification opportunities in the agro-processing industry, especially with the emerging developments in Nigeria and government ongoing reforms to make the nation self-sufficient.

The statement read in part: “We would advise the exchange and the capital market that the Board of Julius Berger at its meeting held on September 22, 2020 approved a diversification opportunity for the company in agro-processing.

“The Board of Directors and the executive management of Julius Berger strongly believes that this diversification direction would support the continued success of the group in the future and align with the strategic objective of the government to stimulate value creation in Nigeria.

However, Julius Berger reiterated its commitment to maintaining and strengthening its leadership in the nation’s construction sector.

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Some Nigerians Are Charging Ship Owners Illegal $36,000 Per Month for Secure Anchorage

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Ship Owners Are Paying Illegal $36,000 Per Month for Secure Anchorage in Nigeria

Mr. Rotimi Amaechi, the Minister of Transportation, on Thursday said certain people are charging ship owners illegal $1,200 per day for secure anchorage in Nigeria.

The minister registered his displeasure with continuous patronage of illegal harbours known within the circle as secure anchorage areas.

Amaechi, who spoke at the ‘2020 World Maritime Day Celebration which held at Eko Hotel and Suites in Lagos’ said the issue was unsettling.

He said, “There is a crisis in the maritime sector. The crisis is on the issue of security.

“Today, we have a single individual partnering with the military that is collecting $1,200 to the detriment of shipping companies.

“That one individual is still managing the business with support of other institutions.”

The minister also accused stakeholders of doing nothing to these individuals, saying only the government had the right to step up secure anchorage area

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174,574 Persons Apply For COVID-19 Support Fund Within 48 Hours

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Survival Fund: 174,574 Persons Apply For COVID-19 MSME Support

More Micro Small and Medium Enterprises (MSME) has applied for Federal Government financial support under the Nigeria Economic Sustainability Plan.

According to the agency in charge of the program, within 48 hours of opening the registration portal of N75 billion National Survival Fund, a total of 174,574 applications were successfully registered for both the Guaranteed Off-take Stimulus and Survival Fund schemes.

The schemes were instituted to support businesses and individuals negatively impacted by the COVID-19 pandemic.

Mariam Katagum, Minister of State for Industry, Trade and Investment, on Thursday in Abuja said as at “8.30am this (Thursday) morning, total successful registrations stood at 174,574.”

She further stated that “the following states have the highest applications as follows, Kano, 19,895; Kaduna, 13,575; Lagos, 13,640; Katsina: 8,383; Federal Capital Territory, 8,085.

Katagum said about 138,000 applications were registered within the first 24 hours of opening the portal, these applicants created profiles and completed the first stage of registration with Kano, Kaduna and Lagos emerging as lead states.

She explained that all successful applicants were sent SMS and email verification with a list of requirements for the second stage of application which would commence on October 1, 2020.

Applicants will be required to upload details supporting their applications which will be verified and if successful, approved for disbursements,” the minister stated.

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