‘Manufacturers’ confidence in economy dwindling’

At 51.3 points, being the outcome of the first quarter (Q1) Composite Manufacturers’ CEO’s Confidence (MCCI) index, the confidence level of CEOs in the sector, though not negative, is dwindling, as performances of some sectors and industrial zones fell short of the 50 points benchmark, latest data from the Manufacturers Association of Nigeria (MAN), has shown.

Indeed, seven out of the 13 industrial zones in the country recorded indexes below 50 points, while seven out of the 10 sectoral groups recorded 50 points and below under the latest survey.

Specifically, industrial zones within Imo/Abia, Edo/Delta, Kaduna, Apapa, Anambra/Enugu, Bauchi/Benue/Plateau, and Abuja performed below the 50 points benchmark, with some going as low at 35 points.

To MAN, the MCCI result for Q1 2019, standing at 51.3 points, clearly depicts a manufacturing sector that is slightly above the minimum threshold, adding that an aggregate or composite MCCI above 50 points signifies that the manufacturing sector is still struggling, as operators have seemingly low confidence level but high expectation that manufacturing performance will improve.

MCCI of 50 points shows that the sector is stagnant; below 50 points signifies that manufacturers are losing confidence on the economy, and that the performance of sub-sectoral groups is retracting.

With manufacturers having to contend with too many challenges that limit their competitiveness, operators in the sector decried the poor electricity supply to industrial firms, over regulation, multiple taxes and levies, poor accessibility to ports/high demurrages, poor economic infrastructure, difficulty in sourcing foreign exchange, low patronage, and counterfeiting/influx of substandard goods.

MAN President, Ahmed Mansur, explained that the newly-created MCCI report revealed that the manufacturing sector was struggling as operating conditions remained challenging.

Mansur said the Association would no doubt continue to promote a friendlier operating system for the manufacturing sector in Nigeria, to remain global and stay competitive.

According to him, the MCCI is an integral part of the four-year transformation roadmap of the association. This index is a strategic effort to proactively review the impact of government policies on the manufacturing sector, with a view to using the evidence-based feedback to advocate for a specific direction of government policy formulation and implementation, he added.

Speaking further, he said the maiden edition was a statistical indicator created to measure the pulse of the manufacturing sector by sampling the perception of business operators, using CEOs of MAN member-companies across 10 sectoral groups and 14 industrial zones as respondents.

”The index essentially gauges manufacturers’ perception using a set of diffusion factors, macroeconomic conditions and business operating environment indicators.

“The diffusion indicators include business condition, employment condition (rate of employment), production level, level of confidence on the performance of the manufacturing sector and expectations for the next three months.

“Specifically, the general macroeconomic indicators assessed include foreign exchange, lending rate, credit to the manufacturing sector and capital expenditure of the government while the business operating environment condition was measured by the intensity of regulation, multiple taxes/levies, access to seaports, local raw-materials sourcing and government patronage of Made in Nigeria manufactured products,” he said.

He said the fact that operators were struggling signified the minimal impact of regulatory reforms and macroeconomic policies on the performance of the sector.

He further revealed that the MAN sectoral group and industrial zones on the MCCI for the quarter turned out to be a mixed bag.