Director-General, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, has again decried the unbearable situation manufacturers are forced to operate in, saying they can no longer tolerate the situation.
 
He listed exorbitant electricity tariff and high cost of alternative energy, high exchange rate and forex scarcity, high cost and shortage of raw materials as some of the problems.
 
Others the MAN DG reeled out include multiple taxation, over-regulation and policy inconsistency, high interest rates and low access to credit, poor road infrastructure and high cost of logistics, insecurity and political instability, low sales and low patronage by government agencies as well as sky-rocketing inflation.
 
However, manufacturers’ optimism rose marginally in the fourth quarter of 2024 spurred by consumer demand during the festive period. The aggregate Manufacturers CEOs Confidence Index (MCCI) increased by 0.5 points to 50.7 points in Q4 of 2024from 50.2 points in the preceding quarter. On a year-on-year basis, the aggregate MCCI decreased by 1.1 points from 51.8 per cent in the corresponding period of 2023.
  
According to the report, present business conditions, employment and production level indices recorded improvement due to the moderate increase in consumer demand, especially during the festive period. However, the three present indices stood below the 50-point threshold due to the prevailing hostile macroeconomic environment.
 
Manufacturing operations were directly stalled by the lingering effect of high cost of raw materials, energy and logistics, as high exchange rate, interest rate and inflation rate remain unfavourable to the overall business environment.
  
In contrast, all three projections for the first quarter of 2025 recorded declines but remain above the 50-point threshold. The projected business condition in Q1 2025 slid from 56 points to 53.2 points.

The projected employment condition also dropped from 53.8 points to 53 points, while the expected production level declined from 54.3 to 54 points. This indicates that despite a predicted slowdown in business activity for January 2025, operators remain moderately optimistic by the expectations of a more stable exchange rate, halt in interest rate spikes, the minimal decline in energy prices and the enactment of favourable Tax Reform Bills by Q1 2025.
 
According to the DG, production and distribution costs surged further by 18.2 per cent from the 20.1 per cent increase witnessed in the preceding quarter. Capacity utilisation contracted further by 0.8 per cent in Q4 2024 from -1.3 per cent drop witnessed in the preceding quarter.
 
He said: “The volume of production dropped by 0.3 per cent in Q4 2024 from a contraction of 3.2 per cent recorded in Q3 2024. Manufacturing investment dipped by 1.2 per cent in Q4 2024 from 3.5 per cent contraction recorded in Q3 2024. Manufacturing employment declined by 0.7 per cent in Q4 2024 compared to 3.5 per cent contraction recorded in the preceding quarter. Cost of shipment rose by 11.6 per cent in Q4 2024 from the 17 per cent increase recorded in Q3 2024. However, sales volume rose slightly by 1.1 per cent in Q4 2024 compared to the 0.4 per cent decline witnessed in the preceding quarter.”
 
Across the sectoral groups, the report showed that seven of the 10 groups witnessed improvement in confidence levels, while three groups contracted, including basic metal, iron and steel, electrical and electronics and non-metallic. It added that the delay in the take-off of the Ajaokuta Steel Company (ASC) and the Aluminum Smelter Company rendered operators in the basic metal, iron and steel sector highly dependent on metallic materials and vulnerable to FX volatility.
 
Only manufacturers operating in Ikeja, Kwara/Kogi, Apapa, Imo/Abia, Ogun, Abuja, Edo/Delta, Cross River/Akwa Ibom, and Oyo/Ondo/Ekiti/Osun recorded index scores above the 50-point standard in the quarter under review. The lingering effect of macroeconomic reforms undermined the performance of operators within Kaduna, Kano and Rivers/Bayelsa, Anambra/Enugu and Bauchi/Benue/Plateau industrial zones with confidence levels below the 50-point threshold. He said the zones had yet to recover from the debilitating impact of the macroeconomic reforms.
 
The report stated: “In particular, the power blackout in the North stalled operations in Kaduna, Kano and Bauchi/Benue/Plateau Industrial Zones in Q4. The contracted confidence in Kwara/Kogi, Anambra/Enugu, Imo/Abia and Edo/Delta Industrial Zones shows that the operators remain highly affected by the outrageous increase in electricity tariff, high borrowing costs as well as the effect of high exchange rate on the cost of shipment. Despite the prevailing hostile macroeconomic environment, the operators in Abuja, Apapa, Ikeja, Ogun and Oyo/Ondo/Ekiti/Osun benefitted largely from the stable exchange rate and the seasonal increase in consumer demand during the period of review.”