Manufacturers’ confidence in the country’s economy dropped by 1.7 points in the third quarter of 2024, amid worsening macroeconomic challenges, according to data from the Manufacturers Association of Nigeria (MAN).
The aggregate Manufacturers CEOs Confidence Index (MCCI) of MAN declined by 1.7 points to 50.2 points in the third quarter, down from 51.9 points in the preceding quarter of 2024.
According to MAN’s Q3 report, all current indices recorded a decline and stood below the 50-point benchmark, reflecting the harsh business-operating environment characterised by high energy costs, exorbitant exchange rates, soaring interest rates, persistent inflation, and unstable fuel supply.
A reading above 50 points indicates expectations of economic expansion, while an index score of less than 50 suggests a deterioration in the operating environment.
“A cursory observation also shows that all indices projected for the fourth quarter recorded a decline. However, each forecast remains above the 50-point benchmark.
“This suggests that while there is a downturn in the projected confidence levels, business optimism for the fourth quarter is moderate due to the festive activities scheduled for the end of the year,” MAN stated in the report.
Across the sectoral groups, the report showed that five of the ten groups recorded confidence levels below the 50-point benchmark compared to the second quarter of 2024.
These include Domestic/Industrial Plastics and Rubber (48 points), Food, Beverage, and Tobacco (47.5 points), Motor Vehicle and Miscellaneous Assembly (44 points), Textile, Apparel and Footwear (44 points), and Wood and Wood Products (48 points).
The report noted that the confidence levels of operators within these sectoral groups were heavily dampened by inflationary pressures, an increase in imported products, low government patronage, and the high cost of raw materials.
In terms of industrial zones, only manufacturers operating in Apapa, Ikeja, Imo/Abia, Oyo/Ondo/Osun/Ekiti, and Rivers/Bayelsa exhibited a high level of resilience despite the hostile business environment during the reviewed period.
MAN acknowledged the Central Bank of Nigeria’s (CBN) efforts to curb inflation and stabilise the naira. However, the association noted that prevailing macroeconomic challenges demonstrate that monetary instruments alone offer limited scope for addressing broader economic issues.
The association urged policymakers to address the root causes of the economic crisis rather than merely tackling its symptoms.
“Therefore, the fiscal authority must chart a new course in collaboration with the monetary authority to expedite the much-needed structural reforms in a highly coordinated approach,” it recommended.
“The achievement of double-digit growth and a friendly macroeconomic environment will require a shift in policy focus. Monetary policy must be supported by a robust fiscal framework and comprehensive structural reforms,” it added.