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How manufacturing sector bleeds – Experts

Experts in the manufacturing sector in Nigeria have affirmed a recent report that indicates that 74 per cent of manufacturing firms operating in the country perceive the business environment as unsupportive in 2017.

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Speaking on the report, a Senior Research Fellow with the Centre for the Study of the Economies of Africa (CSEA), Dr. Adedeji Peter Adeniran, said stagflation and recession crippled the manufacturing sector in 2016 and the effects are still being felt in 2017 as the inflation rate remains double digit even as the country has exited recession.

The NOIPolls collaborated with the CSEA to produce the 2017 Manufacturing Sector Survey that linked unfavourable business environment in Nigeria to unfavourable exchange rate, bad roads, energy scarcity, limited access to credit and policy inconsistency.

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Dr. Adeniran said the problems confronting the manufacturing sector are mostly policy-based issues that require direct government intervention to solve.

He lamented that at the moment, the contribution of the sector to the nation’s Gross Domestic Product is still in single digit despite having the potential of contributing 20 to 30 per cent.

“The manufacturing sector has not fared so well in the last one year. It has been a challenging period for the firms. The key indicators have worsened,” he said.

He cautioned that exit from recession should not be seen as economic recovery as the GDP needs to get to where it was before the downturn set in and even surpass it before the economy could be regarded as having recovered from recession. 

Also speaking on the bad state of the manufacturing sector in the country, the Executive Secretary of the Nigerian Association of Small and Medium Enterprises, Eke Ubiji, affirmed that the sector is struggling to survive under an unfavourable business environment. 

Ubiji revealed that some members of his association have “closed shops” over the challenges hindering growth in the sector.

He said access to finance, difficulty in accessing forex, power and taxation have been huge problems that manufacturers are dealing with. 

The executive secretary said some manufacturers no longer produced up to their installed capacity owing to reduction in the purchasing power of Nigerians and inflation, affirming the report that says 85 per cent of manufacturing companies are not operating up to 75 per cent of their installed capacity. 

“Recession led to weak demand. People ration what they want,” he said, emphasising why companies operate below installed capacity.

On the N220 billion MSMEs intervention fund instituted by the Federal Government to help some small scale manufacturers and women, Ubuji said states got N2 billion each but many of them diverted the intervention fund for politics and not for business credit.

“We’ve done our investigation and some states did not use the money appropriately. They used it for politics,” he said.

An economist with the Lagos Chamber of Commerce and Industry, Dungor Nwike, blamed the influx of fake goods into the country to the challenges that manufacturers face.

Nwike said some companies had to retrench, cut costs of production and volume of products to remain in business.

The economist advocated for public-private partnership to solve the problems in the sector, including the issue of poor state of infrastructures, such as bad roads.

He expressed optimism that the exit from recession will improve the situation and that many manufacturers are likely to stabilise soon.

The Executive Director of CSEA, Dr. Chuka Onyekwena, also affirmed that all is not well with the manufacturing sector in Nigeria, heaping much of the needed interventions on deliberate public policy.

Dr. Onyekwena said the manufacturing sector is a key sector driving the economy and government should pay attention to it.

The Chief Executive Director of NOIPolls said the data on manufacturing is a call to action for all stakeholders, both in the public and private sectors.

In arriving at the damning report on the manufacturing sector in Nigeria, a total of 496 companies across 12 states (two per geo-political zone) were interviewed by NOIPolls between February and May 2017.

The states are Lagos and Ogun (South West), Rivers and Delta (South South), Anambra and Abia (South East), Kano and Kaduna (North West), Bauchi and Adamawa (North East) and Plateau and Abuja (North Central). 

The survey involved administering of close-ended questionnaire on the target respondents within manufacturing companies, selected from the sampling frame of a database of small, medium and large manufacturing companies developed by NOIPolls. 

The target respondents for the survey were manufacturers, owner-managers, general managers, directors, c-level officers and decision makers within the companies.

 

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