Economic crisis shows as key manufacturing indicators move south
Nigeria’s economic crisis has been laid bare as key manufacturing sector indicators such as production level, employment, and raw materials inventory fell in February.
According to the Purchasing Mangers’ Index (PMI) prepared by the Survey Management Division of the Central Bank of Nigeria (CBN), the Manufacturing PMI declined to 45.5 per cent in February 2016, from 47.2 per cent recorded in January.
Out of the 16 manufacturing sub-sectors, 13 reported decline. These included transportation equipment; appliances & components; textile, apparel, leather and footwear; paper products; furniture & related products; fabricated metal products; non-metallic mineral products; petroleum & coal products. Others are printing & related support activities; primary metal; chemical & pharmaceutical products; computer & electronic products and electrical equipment. The report shows that food, beverage & tobacco products sub-sector reported no change, though plastics & rubber products, and cement recorded expansion.
“At 45.0 percent, the production level index for manufacturing sector declined for the second consecutive month, but at a faster rate,” says the report.
In terms of production level index, only plastics & rubber products, primary metal, electrical equipment, as well as food, beverage & tobacco products, reported positive outcomes.
The computer & electronic products sub-sector recorded no change.
Another index that declined is the new orders, which fell to 43.0 per cent as against 46.2 per cent recorded in the previous month.
Also, only six sub-sectors such as primary metal; plastics & rubber products; cement; electrical equipment; chemical & pharmaceutical products, as well as food, beverage & tobacco products saw growth.
Employment level index in the month of February stood at 45.0 percent, indicating declines for the twelfth consecutive month. The employment index declined at a faster rate when compared with the level in January, 2016. Of the sixteen sub-sectors, twelve recorded decline in terms of jobs created or shed.
Similarly, the raw materials inventory index fell to 44.7 percent, from 45.8 in the previous month, indicating a decrease in raw materials inventory for the second consecutive month. Twelve of the sixteen sub-sectors reported lower raw materials inventories.
However, at 52.8 percent, the supplier delivery time index for manufacturing sub-sectors improved after twelve consecutive months of drop. Eight sub-sectors reported faster suppliers’ delivery time in the following order: petroleum & coal products; textile, apparel, leather & footwear; furniture & related products; electrical equipment; non-metallic mineral products; printing & related support activities; paper products and chemical & pharmaceutical products.
Nigeria’s manufacturing sector, which currently contributes nine percent to the gross domestic product (GDP), is already in recession, having seen more than more than two quarters of negative growth. The sector is crimped by inconsistent policy, poor infrastructure, foreign exchange scarcity, high logistics cost, smuggling, and poor purchasing power of Nigerian consumers, among others.
“Currently, many SMEs have gone out of business owing to inadequate power,” said Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), at the MAN Expo held in Lagos.
“There is also policy somersault, which is about to happen in the steel industry. The Export Expansion Grant (EEG) has long been suspended. Some say that the EEG was abused. But if you know those who abused it, call them out and punish them. We need consistent policies to help this sector,” Jacobs also said.
ODINAKA ANUDU