As investment dips by 5.6% in Q2, 2023
By Joy Obakeye
Manufacturing production and distribution costs have skyrocketed by a whopping 17.3 per cent in the second quarter of 2023, a survey by Manufacturers Association of Nigeria (MAN) exclusively obtained by The Daily Times has revealed.
The 17.3 per cent latest figure showed a slowdown from the 24 per cent hike reported for the first quarter of this year.
Also, manufacturing investment dipped further by 5.6 per cent during the same period from the three per cent contraction recorded in the preceding quarter.
The survey, which was titled: ‘MAN CEO’s Confidence Index (MCCI)’, disclosed that the scarcity of both old and new Naira notes across all banking halls and electronic payment channels in the country, meted severe hardship on manufacturers.
The report explained that the prolonged crisis nearly crippled manufacturing companies with about a 20 per cent and 30 per cent decrease in sales for consumer goods and cement respectively.
“The crisis impacted negatively on the manufacturers by directly limiting their working capital, thus halting their daily business operations. In addition, the Naira scarcity crushed the consumer patronage of manufacturing firms and resultantly escalated their volume of inventories, especially for retail goods,” it stated.
The Director General (DG) of MAN, Segun Ajayi-Kadri lamented that major performance indicators of the manufacturing sector all recorded unfavorable changes.
He said: “Amidst the harsh business-operating environment evidenced by poor macroeconomic indices, the underperformance was largely driven by the slow recovery from the cash crunch, high cost of energy, high transportation cost and partially by the abrupt removal of subsidy that took effect towards the end of the second quarter of 2023.
“The economic turmoil disrupted the manufacturing value chain, escalated the cost of manufacturing operations and resulted in a reduction in manufacturing patronage.”
The report also stressed that the perspectives of manufacturers on the implication of the operating environment on manufacturing activities in the second quarter of 2023 were also measured, focusing on multiple regulations, multiple taxes, access to the national ports, local sourcing of raw materials, inventory of unsold manufactured, and patronage of Nigerian manufactured goods by Government Ministries, Departments and Agencies (MDAs).
Survey data on the effects of the macroeconomic environment on manufacturing activities were also generated and analyzed taking into consideration Production and distribution costs; Capacity utilization; Volume of production; Investment; Employment; Sales volume; and Cost of shipment.
However, our correspondent observed that manufacturing employment reduced further by 5.7 per cent in the second quarter of 2023 from three per cent contraction recorded in the preceding quarter;
The volume of production contracted per cent in the quarter under review from a contraction of 13 per cent recorded in the previous quarter, and the cost of shipment rose by 14.3 per cent in the second quarter of 2023, though it witnessed a slowdown from 20 per cent increase recorded in the first quarter of 2023.