A survey conducted by the Manufacturers Association of Nigeria (MAN) has revealed worsening impacts of the macroeconomic environment on the manufacturing sector in the fourth quarter (Q4), 2024.
The survey’s report, tittled ‘Manufacturers’ CEO Confidence Index (MCCI)’, covered the impact of macroeconomic environment on key manufacturing indicators such as production and distribution costs, capacity utilisation, volume of production, investment, employment, sales volume and cost of shipment in the fourth quarter of 2024.
The report revealed that production and distribution costs surged further by 18.2 per cent in the quarter under review from the 20.1 per cent increase witnessed in the preceding quarter.
Capacity utilisation contracted further by 0.8 per cent in Q4 2024 from -1.3 per cent drop witnessed in the preceding quarter; volume of production dropped by 0.3 per cent in Q4 2024 from a contraction of 3.2 per cent recorded in the Q3 2024; while manufacturing investment dipped by 1.2 per cent in Q4 2024 from 3.5 per cent contraction recorded in Q3 2024 quarter.
Also, manufacturing employment declined by 0.7 per cent in Q4 2024 compared to 3.5 per cent contraction recorded in the preceding quarter; while cost of shipment rose by 11.6 per cent in Q4 2024 from the 17 per cent increase recorded in Q3 2024.
However, sales volume recorded a favourable change during the period of review, rising slightly by 1.1 per cent in Q4 2024 compared to the 0.4 per cent decline witnessed in the preceding quarter.
However, 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.
Speaking, the director-general of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir said that “despite the prevailing macroeconomic and operational challenges embattling manufacturing companies in Nigeria, the CEOs remain resilient as revealed by the tepid rise of 0.5 point in the MCCI from 50.2 points in Q3 2024 to 50.7 points in Q4 2024. The moderate improvement in the Aggregate MCCI is the first since Q1 2024.”
According to him, the breakdown of the diffusion indices revealed that all current indices recorded improvement due to seasonal demand and relative stability in the exchange rate during the period.
On outlook, Ajayi-Kadir stated that the year 2025 is a critical period where the government must lead by example by intentionally ramping up domestic industrial production and patronising Made-in-Nigeria to further reduce the Forex demand pressure.
“To boost Nigeria’s trust in locally made products, the government MDAs must demonstrate by leading the charge and making Nigerian products their first choice. Depending on a more stable exchange rate, reliable energy supply, relaxation of monetary policy stance, complete disbursement of intervention funds, further improvement in the combat against insecurity and the effective implementation of the Tax Reform Bills as well as the National Single Window Project, the restoration of macroeconomic stability can become a reality,” he noted.
He added that going forward, it is expedient that the apex bank deviates from continuous interest rate hikes to a more rooted approach that aligns with the peculiarities of our economy.