Manufacturing continues downward spiral as FG fails to revive industries
The continuous fall in Manufacturing Purchasing Managers’ Index (PMI) indicates that many virile industries in Nigeria have been abandoned while the country chases shadows.
The Manufacturing PMI is based on data compiled from purchasing and supply executives. It incorporates indices such as production level, new orders, supplier delivery time, employment level, raw materials and new export orders. Others like output and input prices, quantity of purchases, stocks of finished goods and backlog of work are also factored in. A fall in PMI indicates low level of activities in the manufacturing sector, while an increase represents an upsurge.
The index, computed monthly by the Central Bank of Nigeria (CBN), dropped to 43.7 percent in April 2016, compared with 45.9 percent in the preceding month. The PMI index has seen a crash from upwards of 50 percent in 2014, falling to 47.2 percent in January this year and 43.7 percent in April.
Manufacturing has been in recession in the last three quarters. Policy somersaults, poor power supply and alternative energy sources, lack of infrastructure, foreign exchange crisis, high port charges, poor patronage, unbridled importation, smuggling, and high cost of doing business have all contributed to sending many industries packing.
Over 200 textiles firms shut down on the back of government’s lack of policy direction within the past three decades. Currently, exporters such as RMM Global and Multi Trex Integrated Foods Limited have shut down owing to lack of competitiveness in the global market, arising from lack of support. Many SMEs have shut down on the back of Federal Government’s lack of policy direction and poor coordination in the forex market, while many medium- and large-sized manufacturers have shed hundreds of jobs and could close down if the FX situation persists.
“When you go to Ikeja in Lagos, Sharada in Kano and other industrial zones, what you see are abandoned industries,” said Phillip Asiodu, diplomat and economic adviser to two former presidents, Shehu Shagari and Olusegun Obasanjo, at the 2016 Lagos Chamber of Commerce and Industry (LCCI) Awards.
Asiodu said for more than four decades, policies in the country have not been consistent, regretting that Malaysia and Indonesia, laggards in the 60s, were now economic giants, dwarfing Nigeria.
He said at Independence in 1960, only 25 percent of Nigerians were below and on the poverty line, but regretted that up to 70 percent are on that line at the moment.
“No country is as blessed as we are. We have basic metals, arable land and ideal geographical location. We are now challenged because oil has crashed, but the challenges create an opportunity,” he said.
At the Commerce and Industry Awards, Nike Akande, president, LCCI, said the investment environment may be challenging but has brought the best out of entrepreneurs.
Akande said the essence of the award is to celebrate enterprises that have excelled in the economy amidst multitude of challenges, stressing that most of these firms are indigenous.
“We recognise that there is no perfect time to make an impact in any system. While the government is fixing the power sector, security challenges, foreign exchange issues, infrastructure issues, institutional bottlenecks, corruption, the private sector must move on. The process of selecting nominees and award winners was painstaking. There were entries from virtually all sectors of the economy. There were thorough analytical processes involving business intelligence to validate the outcomes of the entries,” she said. Some of the winners of various award categories include Bank of Industry, May&Baker, Nestle, among others.
ODINAKA ANUDU