By Merit Ibe, [email protected]
The Nigerian manufacturing sector sustained its positive performance in the second quarter of 2022, despite harsh business environment.
During the period, aggregate Manufacturers CEO’s Confidence Index (MCCI) score rose to 54.6 points as against 53.9 points it recorded in the first quarter of 2022.
This is contained in the MCCI’s report for the second quarter of 2022, released by the Manufacturers Association of Nigeria (MAN).
The MCCI noted that the increase recorded during the period under review was achieved in spite of the harsh business condition experienced by manufacturers which was more challenging than what was obtained in the first quarter of the year.
The growth recorded in the second quarter was attributed to the survival strategies adopted by Ni’gerian manufacturers to improve production and increase in the aggregate index score to the feedback on the anticipated improvement in business condition, employment conditions and production levels in the third quarter of the year.
The MCCI added that the compelling adjustments made by government, manufacturers and households in response to general increase in price, foreign exchange shortage, increasing cost of energy, scarcity of raw materials and many more, thrown up by the war in Europe helped to make the increase in the aggregate MCCI index possible.
The MCCI, a research advocacy publication of the MAN, measures quarterly changes in the pulse of operators and trends in the manufacturing sector in response to movements in the macro-economy and government policies by using primary data mined through direct survey on over 400 chief executive officers of MAN member-companies.
It has a baseline score of 50 points and scores above the baseline indicate improvement in manufacturers’ confidence in the economy, while index score less than the baseline suggests deterioration in the operating environment.
The MCCI report said: “In the second quarter of 2022, the index of MCCI marginally increased to 54.6 points up from 53.9 points recorded in the first quarter of the year, despite the challenges including poor access to foreign exchange for importation of raw materials not available locally, effect of rising global inflation, aggressive drive for revenue by government, frequent collapse of the grid, increase in price of diesel, scarcity of wheat and other manufacturing inputs due to the ongoing war in Europe between Russia and Ukraine and the wide spread insecurity that limit productive activities in the economy during the quarter.”
The meagre improvement in the index scored in the second quarter of 2022 implied that manufacturers responded to the economic challenges that prevailed in the quarter with appropriate survival strategies and adjustments, including the remodelling of production operations after the marginal slowdown experienced in the first quarter.
Output was significantly affected in many industries because of challenges of accessing raw materials due to the scarcity of foreign exchange that is constraining many to resort to the parallel market at very prohibitive cost, as very little access existed on the official window.