MAN data shows 5.3% y-on-y sector rise in capacity utilisation

BY ONOME AMUGE

Capacity utilisation in Nigeria’s manufacturing sector rose to 59 percent in the second half of 2021 from 53.7 percent in the preceding period of 2020, representing 5.3 percentage point increase, data from the Manufacturers Association of Nigeria (MAN) reported.

The association, in its performance analysis titled, “Second Half-Economic Review 2021 (July-December 2021)”, attributed the increased capacity utilisation over the review period to the rebound in economic activities globally following the easing of economic and social restrictions meant to contain the Covid-19 pandemic.

According to MAN, the performance growth showed that Nigeria’s manufacturing sector is fast returning to the 2019 pre-Covid level of activities, with cross sectoral group analysis indicating a significant rise in almost all the manufacturing groups in the period under review.

MAN added that the rise in manufacturing capacity utilisation was further underpinned by additional capacities, as BUA Group introduced a cement factory in Sokoko, the new African Glass Limited factory commenced production of glass products.

In the textile apparel and footwear group, capacity utilisation rose 67 percent in the second half of 2021 as against 54 percent recorded in the corresponding half of 2020, indicating 13 percentage point increase over the period. Capacity utilisation in the group also increased by 16.8 percentage points when compared with 50.2 percent recorded in the first half of 2021.

Similarly , manufacturing capacity utilisation in the food, beverage and tobacco sectoral group edged up 62 percent from 58 percent recorded in the corresponding half of 2020, representing four percentage points increase over the period. Capacity in the group also climbed 9.6 percentage points when compared with 52.4 percent recorded in the preceding half.

In the same trend, manufacturing capacity utilisation in the domestic and industrial plastic group was up 65 percent in the second half of 2021 from 56 percent recorded in the corresponding half of 2020, indicating nine percentage points increase over the period. It also increased by 13.1 percentage points when compared with 51.0 percent recorded in the corresponding half of 2020.

Capacity utilisation also increased in the electrical and electronic sectoral group,rising 63 percent in the second half of 2021 from 50 percent recorded in the corresponding half of 2020, indicating 13 percentage points increase over the period. It also rose by 13.9 percent when compared with 49.1 percent achieved in the preceding half.

Manufacturing capacity utilisation in the basic metal, iron and steel sectoral group also increased to 60 percent in the second half of 2021 from 51 percent recorded in the corresponding half of 2020, indicating nine percentage points increase over the period.

It also rose by 2.7 percentage points when compared with 57.3 percent recorded in the first half of the year.

On the contrary, manufacturing capacity utilisation in the non-metallic mineral products slipped to 46 percent in the second half of 2021 from 53 percent recorded in the corresponding half of 2020 and the first half of 2021 respectively, indicating four percentage points decline over the period. Capacity utilisation in the sector also averaged 49.5 percent in 2021 as against 49.9 percent in the corresponding period of 2020.

Commenting on the report, Mansur Ahmed, MAN President stated that the positive movement in the output growth recorded by the manufacturing sector is a reflection of a rebound in world economy activities in 2021 following the continuous containment of the Covid-19 pandemic and the opening of global economies.

In his remarks on the decline recorded in the non-metallic minerals sector, Ahmed explained that manufacturing activities in the sector have been persistently low following the exclusion of some of the veritable raw materials for glass production which are imported from the official forex window.

The situation, he posited, is worsened by the limited availability and high cost of prospecting for local development raw materials in the country.

The MAN president, however, admitted that notwithstanding the improved performance of the manufacturing sector during the year, it was still far beyond its potential growth and contribution to national output due to almost innumerable challenges confronting the sector.

To this end, he recommended that the government create plausible incentives for investment in the development of raw materials locally through the Backward Integration Policy (BIP) and the resource based industrialisation initiatives.