Nigeria’s Manufacturing Investment Drive Rise To N192.89Bn In Half Year 2023

Given the uncertain state of the global economy, the Nigeria’s Manufacturing sector investment in naira value increased to N192.89 billion in the first half of 2023 from N178.39 billion recorded in the corresponding half of 2022, according to the Manufacturers Association of Nigeria, (MAN), in its half year executive summary of the economy from January to June 2023.

This feat indicated a N14.50 billion or 8.1 per cent increase over the period and further increased by N47.3 billion or 32.50 per cent when compared with N145.59 billion recorded in the second half of the year.

The Manufacturers Association of Nigeria, MAN, in its half year executive summary of the economy from January to June 2023, highlighted that the increase in investment in naira value to the currency devaluation which saw naira depreciated to N901/$ or 65 percent depreciation at the Investor and Export Window from N462/$ before the devaluation policy of the CBN was announced.

It noted , however, that the increase recorded does not indicate physical investment by manufacturers but rather nominal which resulted from the devaluation of currency that has made the manufacturers to pay more for plants and machinery importations.

According to the Association, the inventory of unsold finished products in the manufacturing sector saw a significant increase to N271.96 billion during the first half of 2023, as compared to N187.08 billion recorded in the corresponding period of 2022.

“This indicates a substantial rise of N84.88 billion or 45.4 percent over this timeframe. However, there was an N11.64 billion or 4.1 percent decline when compared with the inventory value of N283.6 billion recorded in the second half of 2022.  This increase in inventory can be attributed to a weakened purchasing power of the consumers, brought about by diminishing real household income resulting from the ongoing escalation of inflationary pressures, compounded by the scarcity of naira in the first quarter of the year and the aftermath of the subsidy removal,” it stated.

According to MAN survey, employment generation of the manufacturing sector declined to 6428 in the first half of 2023, which is an indication of 32.8 percent reduction in employment generation capacity when compared with 9559 jobs generated in the first half of 2022.

“Also, the data showed a shed of 313 jobs when compared with 6741 jobs created in the second half of 2022.  The decline in the number of jobs created in the sector during the period further highlighted the unfriendly business environment resulting from the hasty policies and residual effect of the currency redesign policy that led to naira crunch. In the same vein, a total of 3567 jobs were lost in the first half of 2023, indicating 1855 more job lost when compared with the 1709 job lost in corresponding half of 2022 and 850 more jobs lost when compared with 2708 jobs lost in the last half of 2022,” the survey added.

According to the United Nations Industrial Development Organization (UNIDO), the global manufacturing output experienced a significant slowdown in the first quarter of 2023, with growth dropping to just 0.7 percent. This is 0.8 percentage point lower than 1.5 percent recorded in the fourth quarter of 2022.

The survey noted that “given the uncertain state of the global economy, it is evident that the manufacturing sector must explore alternative strategies to reverse this ongoing trend and prevent the risk of a recession. This uncertainty has been amplified by persistent disruptions in the supply chain, sluggish global demand, the consequences of the conflict in Ukraine, and the rising global interest rates, whose effects are only beginning to show in year-over-year growth figures. Although there were varying levels of resilience in the manufacturing sector at the regional level, a noticeable slowdown is now evident in all major regions.

“Sub-Saharan Africa witnessed diminished manufacturing output; a 0.5 percent decline which is the worst performance across broad regions of the world. Larger manufacturers in the continent reported negative growth: -2.6 per cent in Egypt and -3.8 percent in South Africa. On the other hand, some other countries, such as Côte d’Ivoire (3.0 percent), Nigeria (2.0 percent) and Tunisia (4.4 percent), remained in positive territory.”