Manufacturers lower Q2 forecast over operation challenges
Local manufacturers under the aegis of the Manufacturers Association of Nigeria (MAN) have expressed apathy about the operating business environment, citing concerns about rising insecurity and production challenges that continue to dim outlook for the second quarter of the year.
Indeed, they charged the government to put in place a survival plan for the sector, calling for the establishment of a National Response and Sustainability Strategy.
Specifically, the Chief Executive Officers of MAN member-companies in the economy in the first quarter of 2022 (Q1’22) reported declined confidence in the economy as revealed in the latest Manufacturers CEO’s Confidence Index (MCCI) survey report.
MCCI is a quarterly research and advocacy publication of MAN, which measures changes in pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macroeconomy and government policies using primary data mined through direct survey on over 400 CEOs of MAN member-companies.
The survey showed that the aggregate MCCI score declined to 53.9 points in Q1’22 from 55.4 points recorded in Q4’21.
MCCI has a baseline index of 50 points, with points above 50 showing manufacturers have confidence in the economy, while index points below 50 indicate otherwise.
“Although, on the overall, the score suggests fairly stable confidence in the economy driven primarily by improvement in current business conditions, the performance was affected by declining employment and production conditions arising from familiar supply-side constraints.
“The general decline in the index point and the dimmed outlook for the second quarter evidenced by expectations of lower production, employment and unfriendly business conditions, is a cause for concern. This obviously calls for the crafting of a National Response and Sustainability Strategic Plan to avert the looming economic crisis and shortages that would arise from the impact of the Russia invasion of Ukraine,” MAN stated in the report.
MAN further said: “Although the Q1’22 MCCI index score of 53.9 points fell below that of Q1’21, the overall result shows that even though the economy recorded positive improvement despite unstable macroeconomic fundamentals, the manufacturing sector is still largely under severe pressure, its health very well in the fringes and below the desired performance threshold.
“In addition, feedbacks from manufacturers identified limited supply of electricity; high cost of local and imported raw-materials; persisting acute shortage of forex for importation of machine, raw materials not available locally and persisting insecurity in the country as the first out of the challenges limiting the performance of the manufacturing sector in the period under review.
“Undoubtedly, the precarious situation that the manufacturing sector is currently in and the looming dangers ahead call for a National Response and Sustainability Strategy to guarantee the survival of the sector and avoid further de-industrialisation.