Manufacturing sector records 36.59% YoY growth, decline in GDP contribution in Q3 2023
By Sodiq Adelakun
In a recent release by the National Bureau of Statistics (NBS), Nigeria’s manufacturing sector has shown a complex pattern of growth in the third quarter of 2023.
Despite a marginal decline in its contribution to the country’s Gross Domestic Product (GDP), the sector has experienced a notable increase in its real growth rate.
The NBS report indicates that the manufacturing sector’s share of the GDP fell to 8.42 percent in Q3 2023, a slight decrease from the 8.62 percent recorded in the previous quarter.
This drop also represents a decline from the 8.59 percent contribution seen in the same quarter of the previous year. However, it’s not all a downward trend.
The real growth rate of the manufacturing sector for the third quarter stood at an impressive 7.12 percent, which is a significant increase of 1.72 percent from Q2 2023.
This growth rate also marks a substantial year-on-year improvement, with the sector growing by 0.48 percent compared to the third quarter of 2022, outpacing the corresponding quarter’s growth by 2.39 percent.
In nominal terms, the sector’s performance is even more striking. The year-on-year growth hit a high of 36.59 percent, which is a remarkable 34.39 percent increase over the same quarter of the previous year.
This mixed bag of results highlights the dynamic nature of Nigeria’s manufacturing sector amidst various economic challenges and policy changes.
While the sector’s overall contribution to the GDP has seen a slight decrease, the significant real and nominal growth rates suggest a robust underlying momentum.
Stakeholders in the Nigerian economy will be watching closely to see if this growth can be sustained and translated into a larger share of the GDP in the future.
It also represents a 6.69 percent increase when compared to the second quarter of 2023.
In the third quarter of 2023, manufacturing contributed 16.18 percent to Nominal GDP, surpassing the third quarter of 2022 which stood at 13.75 percent and the second quarter of 2023 which was 14.55 percent.
The manufacturing sector comprises activities such as oil refining, cement production, food and beverages, textile, pharmaceutical products, rubber and plastic etc.
In recent times, the reforms of the new administration in the country have negatively impacted the manufacturing sector’s performance.
Notable manufacturing companies listed on the NGX such as Dangote Cement, Notore, and BUA Cement, reported a combined foreign exchange loss of -N129.811 billion.
The FX loss being recorded was a result of the “controlled devaluation” of the naira in June by the CBN through the unification of the FX market.
In a bid to assuage the pains of manufacturers after the subsidy removal, President Tinubu promised to provide N75 billion single-interest loans to manufacturers and review the tax complaints from players in the industry.
The President earlier in his administration set up the Presidential Committee on Fiscal Policy and Tax Reforms which has so far produced a “quick win” report.
