By Merit Ibe
Manufacturers Association of Nigeria (MAN) expended about N81.91 billion on alternative energy sources in 2020, even as it recorded decline in investment.
The Association made the disclosure in its executive summary bi-annual review of the economy for the second half of 2020.
The report adduced the loss and decline in investment to the depressing fallouts of COVID-19.
The review explained that the expenditure on alternative energy sources increased by N20.53 billion from N61.31 billion recorded in 2019.
The summary signed by its Director- General, Segun Ajayi-Kadir, noted that the increase in alternative energy expenditures was also attributable to the general high inflationary pressures on the economy. Though the report noted that electricity supply to manufacturers in terms of energy generated from the sector showed improvement, and in the 2nd half of 2020, electricity supply from the distribution companies to the sector increased to 12 hours on daily average from 10 hours per day on the average recorded since the 1st half of 2019, expenditure on alternative energy source in the sector stood at N81.91 billion in 2020 as against N61.38 billion recorded in 2019.
Specifically, the increase in petrol pump price exerted significant influence on prices of fuel used by the sector to generate electricity, which acted as burden on the manufacturers.
The survey emphasised that it was imperative for the Federal Government to address other frontline challenges plaguing the power sector, including gas shortage, limited distribution network, limited transmission lines, outdated equipment and electricity theft as they are affecting cost of production and also brewing hyperinflation.
Ajayi-Kadir said erratic power supply along the country’s electricity value chain was costing huge revenue leakages to the economy (gross domestic product) and other key sectors of the economy.
According to the report, the real sector of the economy has been the biggest sector suffering inadequate power supply most in the country, with production cost rising on a daily basis from lack of electricity supply.
Similarly, estimated cumulative manufacturing investment from 2013 to the 2nd half of 2020 was N5.73 trillion based on data generated from surveys conducted by MAN over the period.
“Manufacturing investment declined to N56.44 billion in the 2nd half of 2020 from N257.66 billion recorded in the corresponding half of 2019; thus, indicating N201.22 billion decline over the period. It also declined by N5.64 billion or 9.1 per cent when compared with N62.08 billion achieved in the 1st half of the year.
Manufacturing investment declined in the period following the depressing fallouts from COVID-19 that gave no impetus for new investments in the sector.”
Interest rate charged manufacturers also increased to 22.0 per cent in the 2nd half of 2020 from 20 per cent recorded in the corresponding half of 2019. The survey also showed that inventory of unsold goods increased to N303.22 billion in the second half of 2020 from N202.16 billion recorded in the corresponding half of 2019; thus, indicating N101.06 billion or 50 per cent increase over the period.
The report said a total of 3,903 jobs were lost in the sector in the period, out-numbering new jobs created by the time the sector is recording a negative net jobs beginning from the 1st half of the year.
MAN pointed out that manufacturers’ CEOs Confidence Index computed from a survey of over 400 companies in Nigeria for the fourth quarter of 2020 declined to 42.06 points from 43.3 points achieved in the third quarter of the year. Unfortunately, points for third and fourth quarters lie below the 50 neutral points, thus indicating lack of confidence in the economy by manufacturers.