Manufacturing Sector Grows by 2.28% in Q4-2021

Manufacturing Sector Grows by 2.28% in Q4-2021

The Manufacturers Association of Nigeria (MAN) says the sector recorded a 2.28 per cent growth rate in the fourth quarter (Q4) of 2021. This translates to a 3.79 per cent increase when compared with -1.51 per cent recorded in the corresponding quarter of 2020.

Engr Mansur Ahmed, President, MAN, made this known in the association’s second half of the 2021 economic report released on Thursday in Lagos. Ahmed attributed the positive performance of the manufacturing sector in the period under review to the palliative measures imposed by the government to salvage the sector from the effect of the COVID-19 pandemic.

He, however, noted that the sector’s performance contracted by 2.01 per cent in comparison to 4.29 per cent recorded in the preceding quarter of 2021.

“Nevertheless, to improve and reposition the sector back as the engine of growth, there is a need to maintain those policies and formulate others that will encourage investments and boost economic growth,” he said.

He said such investment would also boost the stability of the exchange rate, development of local raw materials, and protection of lives and property, among others.

Ahmed revealed that the electricity supply from the national grid improved in the second half of 2021. He noted that the average daily supply of electricity was stable at 11 hours and power outage, three times per day respectively.

Consequently, the MAN boss said expenditure on alternative energy sources dipped to N45.04 billion from N57.75 billion recorded in the corresponding half of 2020; indicating a N12.71 billion or 22.0 per cent decline over the period.

Ahmed said in the second half of 2021, the average cost of borrowing in the sector from the commercial banks was 24.0 per cent against 22 per cent of the corresponding half in 2020, and 19 per cent in the preceding half.

Also, the cost of capital in the sector averaged 21.5 per cent in 2021 as against 20.8 per cent in 2020.

“Consequently, cost of loanable funds maintained a key challenge to manufacturing notwithstanding the monetary easing stance of the Central Bank of Nigeria,” he said. Ahmed said in Q4, Nigeria’s trade value stood at N11, 707.20 billion, representing 11.79 per cent increase when compared to N10,472.42 billion recorded in the preceding quarter of 2021.

He said the development resulted in a 74.71 per cent increase compared with N6701.05 billion recorded in Q4 2020. He said the country’s import value was N5940.58 billion, indicating 11.33 per cent increase when compared with N5335.86 billion recorded in the preceding quarter of 2021.

“It meant a 69.41 per cent increase in comparison with N3506.55 billion recorded in the corresponding quarter of 2020.

“Similarly, the export value of N5766.62 billion recorded in the period under review revealed a 12.27 per cent increase when compared with N5136.56 billion recorded in the preceding quarter of 2021,” he explained.

Ahmed said the figure also showed that the export value increased by 80.52 per cent in comparison with N3194.50 billion recorded in the corresponding quarter of 2020. READ: Mining Sector Contributes Less Than 1% to GDP – NEITI

The MAN President stated that there was a noticeable improvement in the statistics of foreign exchange flows released by the Central Bank of Nigeria (CBN) in the third quarter of 2021.

He said the situation was due to additional Special Drawing Right (SDR) allocation, proceeds from the Euro bond sales and an increase in non-oil receipts.

“The 16831.30 million dollars recorded in the third quarter indicates an increase of 158.43 per cent when compared to 6512.89 million dollars recorded in the preceding quarter.

“It also revealed a 141.45 per cent increase in comparison with 6971.01 million dollars recorded in the corresponding quarter of 2020.

“The foreign exchange outflow dropped to 7981.37 million dollars in the third quarter of 2021 indicating 10.57 per cent decrease when compared with 8924.85 million dollars recorded in the second quarter of 2021.

“The decrease was due to the stoppage of sales to BDC operators by CBN.

“However, the data showed an increase of 14.76 per cent when compared with 6954.18 million dollars recorded in the third quarter of 2020,” he said.

Ahmed said the year 2021 provided the opportunity to redress the staggering negative impact of the COVID-19 pandemic on global, and national levels. According to him, the economy leapt from -1.94 per cent in 2020 to 3.38 per cent in 2021, just as the manufacturing sector growth increased from -2.85 per cent in 2020 to 3.37 per cent in 2021.

However, he said in spite of the improved performance of the manufacturing sector during the year, it was still far beyond its potential growth and contribution to national output due to the challenges confronting the sector.

The MAN President urged the government to create more incentives for investment in the development of raw materials locally through the Backward Integration and Resource-based industrialisation initiatives.

“We recognise an urgent need for investment and production of Active Pharmaceutical Ingredients (API) in the country; this should be adequately incentivised to encourage significant private investments.

“Government must improve ports administration and resume the implementation of the Export Expansion Grant (EEG), which significantly supported export in Nigeria during the peak of implementation,” he said. #Manufacturing Sector Grows by 2.28% in Q4-2021