The Manufacturers Association of Nigeria, MAN had noticed that the performance of the manufacturing sector in the fourth quarter of 2022 in its Aggregate Index Score had a decline.

They stated that there was difficulty in sourcing forex, high cost of energy, insecurity e.t.c and all these affected production in 4th quarter 2022, which leads to a decline in performance.

This was contained in the Manufacturers CEO’s Confidence Index (MCCI) of the Manufacturers Association of Nigeria (MAN) released recently by the Public Relations and Comms Executive.

MCCI is a quarterly research and advocacy publication of the Association, which measures changes in pulse of operators and trends in the manufacturing sector quarterly, in response to movements in the macroeconomy and Government policies using primary data generated from direct survey of over 400 Chief Executive Officers of MAN member-companies.

The report indicated that MCCI Index is computed using data generated on standard diffusion factors of Current Business Condition, Business Condition for the next three months, Current Employment Condition (Rate of Employment), Employment Condition for the next three months and Production Level for the next three months.

The Index indicated improvement of manufacturers confidence in the economy, while index score of less than the baseline suggests deterioration in the operating environment.

Confirming the decline in the performance of the sector in the period under review, the fourth quarter of 2022, the Aggregate Index Score (AIDS) of MCCI declined to 55.0 points down from 55.4 points recorded in the third quarter of the year.

MAN said the decline in the Aggregate Index Score underscored the persisting challenges and the waning confidence of manufacturers in the economy in the fourth quarter of 2022 over the recorded points in the preceding quarter.

It further stated that the AIS declined in the quarter under review due to the persisting increase in the Consumer Price Index (CPI), erosion in Naira value, difficulty in sourcing forex for productive use, high cost of energy, the issue of insecurity and the lingering Russian-Ukrainian war including the associated adversities.

“In the fourth quarter of 2022, Aggregate Index Score (AIS) of MCCI declined to 55.0 points down from 55.4 points recorded in the third quarter of the year,” the report added.

However, it listed among the standard diffusion factors to include Current Business Condition and Business Condition for the next three months, which it said scored above 50 benchmark while increasing in the quarter; Current Employment Condition (Rate of Employment) and Production level in the next three months scored above the 50 benchmark points though with a decline in the period respectively.

It noted also that Employment Condition for the next three months dipped below the benchmark points to 48.8 points which is also below 49.2 points obtained in the preceding quarter.

MAN in report index stated that Employment decision by manufacturers “is so difficult due to the unpredictability and difficulty in macroeconomic movement.”

“In summation, the fourth quarter of 2022 appeared to be more difficult to manufacturers than the level of hardship in the preceding quarter due to persisting rise in CPI, high cost of energy, unabated erosion in Naira value and difficulty in sourcing forex including the harsh effect of Russian-Ukrainian war.”

In the sectoral analysis done in the report, examination of the ten sectoral groups showed that Index score of Pulp, Paper, Printing & Publishing (49.6 points) and Motor Vehicle & Miscellaneous Assembly (48.4 points) which fell below the 50 benchmark points.

“The score indicates a gross loss of confidence in the economy by manufacturers operating in the two sectoral groups.

“Particularly, the motorcycle sub-group of the Motor Vehicle & Miscellaneous Assembly has been facing difficulty following the banning of motorcycles by various States Government in some metropolis,” the MAN moaned.

However there was a cheering news in the Food, Beverage & Tobacco; Textile Apparel & Footwear; Wood & Wood Products; Chemical & Pharmaceutical; Non-Metallic Products; Domestic/Industrial Plastic & Rubber; Electrical & Electronic; and Basic Metal, Iron & Steel groups, as they said to have all scored above 50 based point.

The score, it added suggested that manufacturers operating in the groups have confident in the macroeconomy.

Conversely, an observation of analysis of the 14 industrial zones shows that Index scores of Rivers/Bayelsa (48.0 points) and Cross-River/Akwa-Ibom (46.5 points) which fell below the 50 base points.

“The scores indicates that manufacturers operating in the zones have lost confidence in the economy due to persisting harsh operating environment in the zones.”

Also Imo/Abia, Kaduna, Ogun, Apapa and Kwara/Kogi though have index scores above 50 benchmark points but declined in the quarter under review.

Meanwhile, Edo/Delta, Oyo/Ondo/Ekiti/Osun, Kano, Ikeja, Anambra/Enugu and Bauchi/Benue/Plateau have index scores above the 50 base points with increase in the quarter under review.

The scores, MAN said indicated continuous improvement of the confidence of manufacturers operating in the zones in the economy.

While also the Index scores of Abuja zone increased to 50.7 points in the fourth quarter of 2022 from 43.5 points obtained in the preceding quarter. The score indicates a significant improvement in the confidence of the manufacturers operating in the zone.

“Apart from the general macroeconomic challenges that affect all the zones, it is important to examine and address State-specific challenges as they concerns the zones,” MAN pleaded with the government.

Consequently, given the above trends, MAN said, “it is crucially important for the Government to have a shift towards a better exchange rate management; and moderate the rising energy cost via better management of refined petroleum products imported into the country.”

“These among other measures would no doubt help to reduce the current high inflation, which is fast eating-up the working capitals of businesses including manufacturing in the economy.”