Bimbola Oyesola
The Manufacturers Association of Nigeria (MAN), has expressed concern over its aggregate CEO’s Confidence Index which closed 50.9points in the second quarter of 2019.
The performance which the Association considered weak for the size of the nation’s economy was attributed to inadequate electricity and multiple taxation among other factors.
According to its latest report on the Nigerian economy, there was a contraction of about 0.4 points when compared with the 51.3 points recorded in the first quarter of the year.
The Association said although, MCCI for the quarter was slightly above the 50 points benchmark of good performance, it was an indication of a weaker manufacturing performance and shows that manufacturers’ confidence in the economy was waning.
It therefore blamed the weak performance to the persistence of numerous operating challenges limiting manufacturing activities even as it explained that the indexes of Current Business Condition in the second quarter dropped to 43 points from the 45.5 points recorded in the first quarter.
The umbrella body of the nation’s manufacturers also noted that Current Employment Condition which stood at 38 points in the first quarter of the year also weakened to 35 points in the second quarter, while production expectation in the next 3 months decelerated marginally from 65.5 points recorded in the first quarter to 64.5 points in the second quarter of the year.
However, indexes of ‘Business Condition for the next ‘3 months’ improved from 54.5 points recorded in the first quarter to 59 points in the second quarter of the year. The report stated that the ‘Employment Condition for the next ‘3’ months’ also strengthened marginally from 52.5 points of the first quarter to 53 points recorded in the second quarter of the year. It however noted that the improvement in ‘Business Condition’ and ‘Employment Condition’ for the next ‘3’ months’ expressed the degree of hope and intensity of the level of expectation of CEOs of manufacturing concerns that government would take more decisive steps to make manufacturing operating environment friendlier before year end. It explained further, “The Second quarter of 2019 MCCI with a composite index of 50.9 points presented a weaker manufacturers’ confidence on the economy when compared with the first quarter performance of 51.3 points; thus, indicating a shrinking manufacturing activity.
“The current MCCI revealed that more sub-sectors and industrial zones performed below the 50-point threshold as against what obtained in the first quarter. This therefore demands that Government should, as a matter of urgency, address the challenges responsible for the observed downward trend.”
The report said the challenges contributed to the weak performance and ranked inadequate electricity supply and high cost of self-generated energy first with the duo of multiple taxation and overregulation as second.
“The afore-mentioned challenges completely resonated with the ranking obtained in MCCI Q1 2019; thus, underscoring the need for government to urgently address these challenges to return the sector to the path of meaningful growth”, MAN said.
On the sectoral group, MAN said the analysis of sectoral responses shows that seven manufacturing sub-sectors performed slightly above the 50-point threshold of good performance in the following order: Domestic/Industrial Plastics, Rubber & Foam (54.5); Motor Vehicle & Miscellaneous. Assembly (54.5); Food, Beverage and Tobacco (53.5); Pulp, Paper & Paper Products Printing, Publishing & Packaging (52.0); both Textile, Wearing Apparel, Carpet, Leather and Leather Footwear and Chemical & Pharmaceuticals recorded 51 points; while Electrical & Electronics stood at 50.5 points.