Manufacturers groan under rate disparity, others, says report
The 2017 Manufacturing Sector Survey conducted by NOIPolls in collaboration with the Study of Economies of Africa (CSEA), has identified a number of unfavourable economic conditions the industrial sector contends with.
They include unfavourable foreign exchange rates (55 per cent), bad roads (55 per cent); unavailability of petrol and diesel (47 per cent); limited access to credit (45 per cent), and policy inconsistency (44 per cent).
Others are lack of Infrastructure (39 per cent), unstable power supply (31 per cent), and weak demand (29 per cent), as the top challenges facing the manufacturing sector in Nigeria.
The Report, which was presented in Abuja on Tuesday, came on the a heels of a report penultimate week by the Central Bank of Nigeria (CBN) that it had injected $9.964 billion into the interbank segment of the foreign exchange (forex) market since it commenced its aggressive interventions in February this year.
The report declared that the sustained intervention in the Forex market had helped to ease pressure on Nigeria’s forex market, which prior to the CBN’s action had been pummelled by speculators.
A breakdown of the dollar sales indicated that $680million was pumped into the market in February, $1.542billion was sold in March, $1.616billion in April, $2.102billion in May, and $1.631billion in June.
Also, while the Central Bank offered $1.639billion to banks to sell to their customers in July, as of August 21, it had sold a total of $754million.
The $2.102billion sold by the CBN in May remains the highest in the six months under review, during which it sold dollars in eight different sessions, in a bid to stabilise the market and discourage currency speculation.
However, much of the dollar sales had been targeted at retail invisibles for PTA, BTA, school fees, and medical bills, wholesale forwards, SMEs, and Secondary Market Intervention Sales (SMIS). Only a negligible portion went to the manufacturing and real sector of the economy, a fact which somewhat confirms the outcome of the new Report.
Presenting the Report yesterday, the NOI POLLS Chief Executive, Dr. Bell Ihua, explained that the 2017 Manufacturing Sector Survey represents a 14-point increase from the 2016 result (60 per cent), thus indicating a worsening of the business environment.
He said lack of infrastructure; red-tapism and corruption were identified as some of the structural bottlenecks stifling the business environment in the current review.
The report said “75 per cent of manufacturing companies say the disparity in foreign exchange rates has had negative impact on their operations. Similarly, 80 per cent of the companies affirmed that inflation has had a negative effect on their businesses.
“All the manufacturing companies interviewed affirmed that the recession had impacted their business operations and profitability; with 70 per cent stating that the recession had impacted their businesses negatively.”
On the issue of bad roads, manufacturers in particular lamented the poor state of some roads such as: Apapa-Tin Can Access road, Lagos-Ibadan Express road, Benin-Ore road, Oyo-Ogbomosho (in South West), East-West road, Benin-Agbor road, Aba-Port Harcourt road (South-South), Ajaokuta-Ayangba-Nsukka road, Lokoja-Ajaokuta road, Obajana-Okene road, Makurdi-Enugu road (North-Central and South-East) and many others.
Ihua said and a total of 496 companies across 12 states, which represent two per geo-political zone, were interviewed between the months of February and May 2017.
But the Manufacturers Association of Nigeria (MAN) was not represented at the presentation, which had representatives from CSEA, Dr Adedeji Adeniran, Eke Ubiji; the Executive Secretary/Chief Executive Officer NASME, Charles Dungor; and the Lagos Chambers of Commerce and Industry.
Ihua said 74 per cent of manufacturing companies found the business environment unsupportive in 2017, while half of the companies considered importation of raw materials critical to their production; particularly medium to large manufacturing companies, with up to 62 per cent of inputs imported.
In his remark, Ubiji urged the Federal, State and Local Government policymakers to have a critical view of the survey in the bid to aid manufacturing in Nigeria, noting that a huge fund is set aside for the companies, but accessibility has remained a big challenge.
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