Photo caption: Director-General of MAN, Mr. Segun Ajayi-Kadiri
By Charles Okonji
The Manufacturers Association of Nigeria (MAN) has raised concern that production and distribution costs in the fourth quarter (Q4) of 2024 surged further by 18.2 percent against the 20.1 percent increase witnessed in the preceding quarter.
The Director General of MAN, Mr. Segun Ajayi-Kadiri who made this known in the MAN Manufacturers CEO Confidence, noted that capacity utilisation contracted further by 0.8 percent in Q4 2024 from -1.3 percent drop witnessed in the preceding quarter.
According to him, “The volume of production dropped by 0.3 percent in Q4 2024 from a contraction of 3.2 percent recorded in the Q3 2024. Manufacturing investment dipped by 1.2 percent in Q4 2024 from 3.5 percent contraction recorded in Q3 2024 quarter. Manufacturing employment declined by 0.7 percent in Q4 2024 compared to 3.5 percent contraction recorded in the preceding quarter.
“Cost of shipment rose by 11.6 percent in Q4 2024 from the 17 percent increase recorded in Q3 2024. However, sales volume rose slightly by 1.1 percent in Q4 2024 compared to the 0.4 percent decline witnessed in the preceding quarter. A close observation of the analysis indicates that only the sales volume recorded a favourable change during the period of review.
The DG note that the analysis generally reveals that the adverse effects of the prevailing macroeconomic reforms are diminishing as Production & Distribution Costs, Capacity Utilisation, Volume of Production, Investment, Employment and Cost of Shipment recorded lower adverse changes compared to the previous quarter.
He stated, “During the survey, manufacturers identified and ranked the challenges facing their operations in order of severity, adding that manufacturers’ challenges in Q4 2024 include Exorbitant Electricity Tariff Hike; High Cost of Alternative Energy; High Exchange Rate; Forex Scarcity; High Cost and Shortage of Raw Materials; Multiple Taxation; Government Over-regulation & Policy Inconsistency; High Interest Rate & Low Access to Credit; Poor Road infrastructure & High Cost of Logistics; Insecurity & Political Instability; Low Sales & Low Patronage by Government Agencies; and High Inflation.
“The country’s budget allocation for capital projects is grossly limited by debt service burden while lack of continuity in governance has resulted in several uncompleted infrastructure projects that are meant to reduce logistics costs and enhance productivity in the manufacturing sector. The weak enforcement of the Procurement Act and the Executive Order 003 is also a deterrent to the local patronage of contractors within the sector.”
He averred that the manufacturersCEO revealed that 83.3 percent of the respondents confirmed that over-regulation by the Government depresses manufacturing productivity, adding that 1 percent attested that multiple taxation depresses productivity in the sector while 63.2 percent affirmed that port gridlocks negatively affect productivity in the sector.
“The result indicates that manufacturing operations remain heavily challenged by Government over-regulation, multiple taxation and port gridlocks.
Furthermore, 60.8 percent confirmed that local sourcing of raw materials has improved in the sector and only 52.8 percent agreed that the implementation of the Executive Order 003 had been beneficial to the sector. Compared to 56.4 percent in the preceding quarter, 63.2 percent of the CEOs surveyed agreed that the inventory of unsold manufactured goods had reduced in the last three months. Based on percentage of “Agreed” responses, the result shows minimal improvement of 6.4 points, 2.1 points and 3.5 points respectively in local sourcing of raw materials, Government patronage and reduction of unsold inventory.
“The slight improvement in local sourcing of raw materials was due to the Forex limitations, moderate progress in the fight against insecurity and the gradual recovery of agricultural production. However, further improvements will depend greatly on the enactment and implementation of the Raw Materials Processing and Local Production Protection Bill.
“The sporadic rise in the cost of imported procurements accounted for the slight increase in Government patronage of domestic manufacturers. However, further improvement is heavily dependent on the enactment and implementation of the Local Industry Patronage Bill. The moderate reduction in unsold inventory was attributed to the festive seasonal demand as well as the waning impact of the macroeconomic reforms on households, as reflected in the relative stability of exchange rate and the minimal decline in the price of PMS during the period.”
