Business a.m
The Manufacturers Association of Nigeria (MAN) has forecast a challenging operating environment for manufacturers, particularly in the first half of 2024.
Segun Ajayi-Kadir, the director-general of MAN,projected that the year 2024 will be difficult for manufacturers, with a challenging outlook for the first half of the year. However, he noted that there may be a possibility of recovery in the third quarter.
According to the MAN DGl, the anticipated recovery of the manufacturing sector in the second half of 2024 will require a coordinated effort from the government and manufacturers. He noted that policy interventions such as increased support for local production, trade facilitation and policy consistency are needed to drive growth. He further pointed out that the recent trade data from the United States and South Africa, which showed a decline in their manufacturing sector, is indicative of the current global economic challenges facing the sector,emphasising that Nigeria is not immune to these challenges, as evidenced by the country’s declining manufacturing sector.
Ajayi-Kadir stated, “In 2024, sectoral real growth is expected to hit about 3.2 per cent; contribution to the economy will most likely exceed 10 per cent and the Manufacturers’ CEOs Confidence Index is predicted to rise above 55 points thresholds by the end of Q4 2023.
“Average capacity utilisation will still hover around the 50 per cent threshold as the foreign exchange related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.
“The sector may experience a meagre improvement in manufacturing output as foreign exchange and interest rates related challenges are expected to subside from the third quarter.”
Ajayi-Kadir projected that manufacturing output would increase in the third quarter of 2024, as the government disburses the capital budget provisions to abandoned, ongoing and new capital projects. He noted that the government was expected to prioritise the use of locally made products in these projects. This, he said, would have a positive impact on the manufacturing sector, as it would encourage the use of locally made goods and increase the demand for locally produced goods.
The director-general also mentioned that the increase in global oil prices, as well as local production and refining of petroleum products, would help stabilise the foreign exchange market. He noted that the projected unification of the exchange rate would also be beneficial for the manufacturing sector, as it would reduce the cost of imported raw materials and equipment. He also mentioned that this would help to reduce inflationary pressures and create a more stable operating environment for manufacturers.
According to the director-general, the implementation of the Electricity Act of 2023 will be crucial for the manufacturing sector. He noted that the increase in private investment in renewable energy and energy efficiency would be beneficial for manufacturers. He also emphasised that the improvement in electricity supply would help to reduce production costs and increase productivity.
Ajayi-Kadir noted that the general positive outlook and commitment to domestic production would help to boost the sector. He concluded by saying that while 2024 might start on a tough note for the sector, it might end with some measured improvements.
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