The Manufacturers Association of Nigeria (MAN) has reported a significant decline in the value of manufacturing production due to challenging economic conditions. The value of manufacturing production decreased from N7.39 trillion in 2021 to N6.67 trillion in 2022, marking a decline of N720 billion.
Frank Onyebu, Chairman of MAN’s Apapa branch, revealed this information during the branch’s annual general meeting. He highlighted that the year 2022 was marked by a harsh operating environment characterized by factors such as high inflation, elevated interest rates, multiple taxes, high energy costs, forex liquidity issues, and raw material shortages.
The manufacturing sector faced supply shortages, escalating material prices, and difficulties in hiring qualified staff, which collectively hindered its growth. Onyebu explained that the value of manufacturing sector output declined from N3.73 trillion in the second half of 2021 to N2.68 trillion in the corresponding period of 2022, indicating a 28% decrease. The decline was even more pronounced when compared with the preceding half, with a 32% decrease from N3.99 trillion.
He attributed part of the decline to the absence of new capital projects by the government in the latter half of 2022, as the government focused on the upcoming elections. Additionally, Onyebu noted that the challenging operating environment led to some manufacturers leaving Nigeria for neighboring countries in 2022. Many more were considering such moves or struggling to maintain their operations while hoping for positive changes under the new administration.
Regarding raw materials, the local sourcing of inputs within the manufacturing sector increased to an average of 52.8% in 2022 compared to 51.5% in 2021. This uptick in local sourcing was driven by the difficulty in obtaining foreign exchange, which forced manufacturers to rely more on domestic sources for raw materials, despite the associated higher costs.
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