Manufacturing sector investment drop to N145.59bn in 2022- Report
By Joy Obakeye
The Manufacturers Association of Nigeria (MAN) has disclosed that manufacturing sector investment dipped to N145.59 billion in the second half of 2022 down from N160.88 billion recorded in the corresponding half of 2021; thus, indicating N15.29 billion or a 10 per cent decline over the period.
It further declined by N32.8 billion or 18per cent when compared with N178.39 billion recorded in the first half of the year. Manufacturing investment totalled N323.98 billion in 2022 as against N305.02 billion recorded in 2021.
The report noted that investment in the period was affected by the high debt profile of the Government which particularly deters foreign investment, high cost of borrowing, high cost of energy, low consumption during the period and many more.
The report also explained that the inventory of unsold finished products in the manufacturing sector increased to N282.56 billion in the second half of 2022 up from N169.75 billion recorded in the corresponding half of 2021; thus, indicating N112.81 billion or 66 per cent increase over the period.
This was stated recently in the Executive Summary of the H2 2022 Bi-Annual Economic Review of the Manufacturers Association of Nigeria (MAN). The review said that it also increased by N85.46 billion or 51 per cent when compared with N187.1 billion recorded in the first half of the year.
” Inventory of unsold goods in the sector totalled N469.66 billion in 2022 as against N384.58 billion recorded in 2021. The high inventory recorded in the period is attributed to low purchasing power in the economy due to the declining real income of households following the continuous increase in inflationary pressures in the country.
READ ALSO: Twitter: Elon Musk adds audio, video calling features
“This is worsened by the Naira Redesign policy which began in the last quarter of 2022. The withdrawal of a large amount of the ‘old Naira’ without commensurate replacement with the ‘new notes’ resulted in a cash crunch in the economy with very limited means of purchasing items by households across the country.
Manufacturing Employment
Based on a MAN survey since 2013, cumulative manufacturing employment was estimated at 1,686,725 at the end of 2022. However, in the second half of 2022, manufacturing employment dipped to 6741 down from 8508 and 9559 recorded in the corresponding half of 2021 and the first half of 2022 respectively.
The decline in the number of jobs created in the sector during the period corroborates the poor operating business environment that was perverse with high energy costs, the exorbitant cost of borrowing, high inflation, low sales due to limited cash and many more.
Electricity Supply to Industries
Electricity supply to the industries from the national grid declined marginally to 11 hours per day from 12 hours recorded in the preceding half. However, the average number of outages per day stabilized at 4 times in the second half of 2022 as it was recorded for the first half of the year. Irrefutably, the trends show that power playing in the industry is still a huge challenge which accounts for a huge investment manufacturing for energy generation.
Consequently, expenditure of alternative energy also increased to N76.7 billion in the second half of 2022 from N45.04 billion recorded in the corresponding half of 2021; thus, indicating an N31.66 billion increase over the period.
It also increased by N8.9 billion when compared with N67.8 billion recorded in the preceding half. The expenditure was incurred on procurement of diesel, gas, generators and spare parts, inverters and UPS, etc.
