The Nigerian manufacturing sector may see difficulties in 2024, especially in the first half of the year, according to the Manufacturers Association of Nigeria.
According to Arise News, the declaration was a part of MAN’s “Manufacturing Sector Outlook for 2024,” which was presented on Tuesday by Mr. Segun Ajayi-Kadir, Director General of MAN.
MAN stressed the need for the government to prioritise the manufacturing sector and to recognise the industry’s importance as a key contributor to long-term economic growth.
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The association emphasised that the pattern that has been seen points to a possibly poor picture for the manufacturing industry in the first half of 2024.
“The period will be difficult, with a sliver of hope for recovery from the third quarter. The anticipated rebound is heavily reliant on policy stimulus backed up by a mix of domestic growth-driven, export-focused, and offensive trade initiatives.
“This will promote resilience, steady growth and ensure that the sector gains meaningful traction in the later part of the year.”
According to Ajayi-Kadir, “Average capacity utilization will still hover around the 50 percent threshold as the FX-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.”
He said there might be a little increase in the sector’s manufacturing output in the third quarter as issues with interest rates and foreign exchange ease.
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“Higher manufacturing output is expected to begin in the third quarter of the year as the government disburses budget capital provisions to abandoned, ongoing, and new capital projects, with a preference for locally made products.
“Ongoing concessions of seaports, airports, and roads may also provide opportunities for the cement sub-sector, as well as contribute to infrastructure upgrades required to boost manufacturing productivity.
“Hopefully, the government will see the manufacturing sector as the key,” the association added.
He continued by outlining how the projected increase in global oil prices, rising domestic oil and gas production, local petroleum product refining, and anticipated advancement in exchange rate unification are all expected to support foreign exchange (FX) market stability, which will have a favourable impact on manufacturing in the second half of the year.
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This should reduce the pressure on FX demand and increase the amount of money coming in from the sale of oil and gas.
On top of that, “the ongoing tax reforms and the envisaged bank recapitalization will frontally address the challenges of multiple taxation and poor access to credits that have continued to limit manufacturing sector performance, if successfully implemented,” he added.
Ajayi-Kadir urges the government to actively encourage the usage of locally produced Nigerian items in order to lessen the country’s excessive reliance on imports. Executive Order 003 must be strictly implemented by all relevant ministries, departments, and agencies, and this is the responsibility of the three branches of government.
“To address the challenges of low productivity and imported inflation, the government should encourage local sourcing of raw materials through comprehensive and integrated incentives.”
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It stressed the need of continuing initiatives to improve liquidity and stability and encouraged the federal government to give foreign exchange (FX) and loan distribution to manufacturers top priority.
Furthermore, MAN suggested that the Central Bank of Nigeria (CBN) endeavour to encourage commercial banks to purposefully provide the manufacturing sector with long-term loans with single-digit interest rates. This initiative aims to expedite the realization of a $1 trillion economy.
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