Confidence Index drops to 51.9% in manufacturing sector — MAN
…As stakeholders plead with CBN to halt rate hike, give room for sector recovery
A recent report by the Manufacturers Association of Nigeria (MAN) has revealed that the Chief Executive Officer (CEO) Confidence Index in the manufacturing sector has dropped to 51.9 percent.
The CEO confidence index dropped from 53.5 percent in the first quarter of 2024.
The index developed by MAN is a barometer that measures changes in a quarterly pulse of manufacturing activities to movement in the macro economy and government policies.
The index aggregates the views of 400 CEOs of manufacturing companies across the six geopolitical zones on changes in the economy such as business and employment conditions, production levels and operating environment.
Commenting on the report, the President of MAN, Francis Meshioye noted that the resumed contraction of the MCCI proved that these were difficult times for operators in the manufacturing sector.
He said all current indicators of manufacturers’ confidence went south due to exorbitant increases in the electricity tariff, aggressive hikes of the interest rates, high exchange rate and persistent inflationary pressure.
The MAN president added that the recurrence of fuel scarcity as well as the disruptive effect of the Industrial Action observed by the National Labour Congress made things as they were.
He noted that Nigeria’s path to sustained industrialisation and steady economic growth was threatened due to the minimal attention given to the numerous pressing challenges limiting the performance of the manufacturing sector.
Meshioye urged the government to adopt measures to tackle the burning challenges that are waning manufacturers’ confidence and deviating the country from the path of sustainable robust growth.
“Government must insulate the productive sector from the impact of continuous hike in monetary policy rate by ensuring the disbursement of the N75 billion single digit loan approved by President Bola Tinubu, GCFR over a year ago for the manufacturing sector.
“MAN recognises the efforts made by the Monetary Policy Committee (MPC) to stabilise prices and observes the rationale behind its decisions.
“Clearly, the capacity of the manufacturing sector to play its strategic role of stimulating economic growth is further constrained by the increase in interest rate.
“However, it is expedient that the survival of manufacturing in Nigeria is prioritised when making monetary policy decisions,” he said.
He also urged the government to direct the Central Bank of Nigeria (CBN) to conduct a comprehensive assessment of the impact of previous decisions of the MPC on the inflation rate over the last five years.
This, he noted, would provide information that would guide future MPC decisions.
Meshioye implored the CBN to be domestic production-centric by taking a detour from continuous hikes in MPR and allowing time for the real sector to recover from the impact of previous hikes.
He also advised the CBN to collaborate with the Coordinating Minister of the Economy to facilitate a stronger handshake and coherence between monetary and fiscal policies.
“We must minimise pressure on foreign exchange reserves by incentivising backward integration and local sourcing to decrease reliance on imported products and raw materials.
“Nigeria must utilise foreign exchange revaluation gains to improve patronage of made-in-Nigeria products and upgrade electricity, road and rail networks within industrial hubs.
“Government must encourage nationwide investments in renewable energy sources to alleviate energy cost and enhance competitiveness.
“Government should also direct the CBN to clear all outstanding dollar obligations on the foreign exchange forward contracts of manufacturing concerns to engender confidence in the market,” Meshioye said.
