By Merit Ibe [email protected]
The Centre for the Promotion of Private Enterprises (CPPE), has raised the alarm over the worsening state of the manufacturing sector, saying it calls for government’s emergency response.
It worried that the manufacturing sector shrunk by 1.91 per cent just as the quarterly real GDP growth report by Nigeria Bureau of Statistics (NBS) dipped to 2.25 per cent in the third quarter of 2022, from 3.54 per cent in the second quarter.
Chief Executive Officer of the centre, Dr. Muda Yusuf, noted that the decline reflects the diverse headwinds bedevilling the economy.
These headwinds, he noted included; the macroeconomic instability, heightening inflationary pressures, currency depreciation, foreign exchange illiquidity, surging energy cost.
Others are; weakening purchasing power, legacy structural constraints, lingering insecurity, and crippling trade facilitation issues.
Yusuf said of greater concern was the slump in the food and beverage sector, which contracted by 4.05percent, which is the first contraction of the sector since the recession of the second quarter of 2020.
“The food and beverage sector is the flagship of the Nigerian manufacturing sector. For several decades, it was the toast of investors on the stock market. The sector contributed N2.2 trillion to GDP in the third quarter of 2022,”he said.
He noted that the development is a reflection of a major setback for the Nigerian manufacturing sector, which calls for an emergency response by the government. “The plunge in the manufacturing sector performance has profound implications for food inflation, food security and employment. The food processing sector has the biggest impact on jobs because of the strong backward integration content and high multiplier effect in the agriculture value chain.”
To fix the economy and address sectors that are in recession, alongside that slowed and contracted, Yusuf opined that there was need to put in place more reforms and intervention measures.
He listed some of expected reforms to include; fixing the macroeconomic headwinds of high inflation and currency volatility, addressing the structural impediments to production and other economic activities.Others are; reforming the foreign exchange market to inspire investors’ confidence, addressing the challenges of insecurity, addressing the challenges of logistics, taking urgent steps to tame inflation and boost purchasing power of the citizens, accelerate the implementation of the Petroleum Industry Act, reform the monetary policies to facilitate financial deepening in the economy, creative support for small businesses to promote economic inclusion. Accelerating efforts to ensure domestic refining of petroleum products, fiscal reforms which prioritise infrastructural development and transparency in the budgetary process.