Manufacturing hit by slow budget implementation, policy snags

Manufacturers finger slow implementation of the 2017 budget and government inability to implement specific industry policies as major factors that led to the decline in manufacturing gross domestic product in the third quarter of the year.
They say apart from general lull in the economy which hurt purchases, the slow implementation of the 2017 budget led to a drag in payment of iron and steel contractors who did government projects, adding that lack of progress in the automotive industry policy impacted on the sub-sector performance.
“It is not far from sluggishness in the implementation of the 2017 budget and the slow expenditure,” preliminary comments on Q3 2017 NBS report by Frank Jacobs, president of the Manufacturers Association of Nigeria (MAN), said.
In the 2017 3rd quarter report released recently by the National Bureau of Statistics (NBS), manufacturing sector real output growth was -2.85 percent (year on year), higher than the -4.38 percent in the same quarter of 2016 by 1.53 percent points and -3.49 percent points lower than the rate (0.64 percent) recorded in 2nd quarter of 2017. Real contribution to GDP in 2017 third quarter was 8.81 percent as against 9.04 percent contribution of the second quarter of 2017.
The biggest looser, according to this NBS, was the motor vehicle assembly sectoral group that regressed by 1.54 percent negative points, followed by the basic metal, iron and steel sectorial group that plummeted by 0.48 negative percentage points. Non-metallic sectorial group, particularly the cement sub-sector, followed closely as it regressed by 0.40 negative percentage points.

Jacobs said the general lull in business climate and the slow implementation pace of requisite policies also hurt the sector within the quarter.

The 2017 budget dragged till the second half of the year, holding many manufacturers who supplied their products or did contracts for government.

The National Automotive Industrial Development Plan (NAIDP), as supervised by the National Automotive Design and Development Council (NADDC), jerked up the duty for importing cars to 35 percent and levy for 35 percent to encourage local auto assemblers through incentives between 2013 and 2023. However, car prices have risen astronomically amid lower consumer purchasing power.
The auto industry is expected to import and sell between 8,000 and 10,000 new vehicles this year, which is lower than the 15,000 projected at the end of last year, according to Kunle Ade-Ojo, managing director/CEO, Toyota Nigeria Limited.

Also, steel makers say low patronage across the country is hurting them and cropping investments in the sub-sector.
One steel maker said when patronised, they are owed by governments at various levels for three to six months.
“The manufacturing sector at the moment still requires stable and adequate enabling environment, a reliable policy support systems that would effectively address existing familiar challenges like inadequate power and dearth of basic infrastructure prevalent in the sector,” Jacobs said.

“Government therefore needs to rise up to the occasion by further deploying strategic synthesis of fiscal and monetary policies, further make the operating environment friendlier, enhance the purchasing power of average Nigerians, further support the manufacturing, agriculture, telecom and oil with comprehensive and integrated support system that would guarantee meaningful growth,” he added.

ODINAKA ANUDU